There are many occupations people resort to living. Some do jobs, some are self employed. Many are engaged in agriculture and service sector. The list goes on. Apart from these there is an option to earn money without doing anything. The option is to invest money in such an asset class that can generate second source of income. The best option is to invest your money in such stocks in share market which deliver good dividend payout to its share holders i.e., dividend paying stocks along with a good return on equity.
So you can choose these companies and invest into them. Then you will receive dividends when they announce dividends. With these dividends you can easily make a living. Dividend paying stocks can deliver you a passive source of income. Many of us work hard to generate a secure source of income i.e., passive income. But often we cannot find out or generate a second source of income. It is a good idea to invest your money in those stocks that regularly pay dividend and high dividend yield. Investors should check out the financial status of the stock. Good dividend paying stocks must have following features,
- Consistent dividend payout over the past 5 years.
- High dividend yield for last 5 years.
- Growth in dividend per share from time to time.
Points to consider while choosing dividend paying stocks
To get a certain income from investment you need to research the balance sheet, Profit and loss account carefully before investing in any company. If the company distributes the maximum of its profits to its shareholders, it is the best company to invest in. Again if the company is able to increase its profit margin consistently you may buy the share of the company. So, analyse the profit growth of the company over the last 10 years or at least past 5 years. If the company’s sales growth decrease then the profit margin declines year-on-year so it is quite clear that it does not deliver good dividend yield. It is smart act to exit from the company. Here are few dividend paying stocks with their strong fundamentals:
| Company |
Market Cap |
Compounded sales growth |
Dividend Yield |
| Hindustan Zinc |
Rs. 1,19,280 Crore |
8.66% |
10.41 % |
| SJVN Ltd |
Rs. 10,571 Crore |
9.65 % |
10.76 % |
| Vedanta |
Rs. 82,670 Crore |
7.61% |
9.54 % |
| Coal India |
Rs. 1,73,341 Crore |
19.16% |
7.85 % |
If you have any question regarding dividend paying stocks feel free to comment so that we have a discussion. If you have found this post helpful share this post with your loved ones.
