Are there any stocks which pay dividends higher than FD rate?

As we all are aware the interest rates in India has been ever decreasing. This is because, India is a developing nation. Developing nation requires huge investments from both public sector as well as private sector. More investment by companies means more borrowing, and more borrowing requires monetary policy which look attractive to these companies. Hence, as we move from being a Developing Nation to being a Developed Nation, we are also seeing reduction of interest rates overall. Hence as per previous trends, we see a surge in investments in various sectors when the interest rates are low.

As an end user, what does it mean for us? - The interest rate on Bank FD will also reduce. Currently, the FD returns are around 5 to 5.5% only and RBI is set to cut the rate further in the coming years. So is there an alternative to this? 

In this article, we are are going to cover few companies which give good dividends - more than the returns of FD and are government companies. Sounds great? Lets dive in.

NLC India Limited

NLC India Limited (NLC) (formerly Neyveli Lignite Corporation Limited) is a 'Navratna' government of India company in the fossil fuel mining sector in India and thermal power generation. It annually produces about 30 million tonnes of Lignite from opencast mines at Neyveli in the state of Tamil Nadu in southern India and at Barsingsar in Bikaner district of Rajasthan state. The lignite is used at pithead thermal power stations of 3640 MW installed capacity to produce electricity. Its joint venture has a 1000 MW thermal power station using coal. Lately, it has diversified into renewable energy production and installed 1404 MW solar power plant to produce electricity from photovoltaic (PV) cells and 51 MW electricity from windmills.

The company has a good dividend track report and has consistently declared dividends for the last 5 years.

For the year ending March 2020, NLC India has declared an equity dividend of 70.60% amounting to Rs. 7.06 per share. At the current share price of Rs. 61.85 this results in a dividend yield of 11.41%.

Indian Oil Corporation Limited

Indian Oil Corporation Limited (IOCL) is an Indian government oil and gas corporation. It is under the ownership of Ministry of Petroleum and Natural Gas, Government of India headquartered in New Delhi. It is the largest commercial oil company in the country, with a net profit of ₹15,889 crore for the financial year 2018-19. It is ranked 1st in Fortune India 500 list for year 2016 and 117th in Fortune Global 500 list of world's largest companies in the year 2019. As of 31 March 2017 IndianOil's employee strength was 33,135. It is India's largest downstream oil company, a turnover of ₹5,28,157 crore and a net profit of ₹15,889 crore in 2018-19.

The company has a good dividend track report and has consistently declared dividends for the last 5 years.

For the year ending March 2021, Indian Oil Corporation has declared an equity dividend of 105% amounting to Rs 10.50 per share. At the current share price of Rs 101.05 this results in a dividend yield of 10.40%.

Coal India Limited

Coal India Limited (CIL) is an Indian government undertaking and coal mining and refining entity under the ownership of Ministry of Coal , Government of India headquartered in Kolkata, West Bengal, India. It is the largest coal-producing company in the world and a Maharatna public sector undertaking. The company contributes around 82% to the total coal production in India. In April 2011, CIL was conferred the Maharatna status by the Union Government of India, making it one of the seven with that status. As of 14 October 2015, CIL is owned primarily by the Union Government of India who controls its operations through the Ministry of Coal. The company's turn was Rs. 96,080 Cr. and Net profit of Rs. 16,701 Cr. for the year ending March 2020

 The company has a good dividend track report and has consistently declared dividends for the last 5 years.

For the year ending March 2021 Coal India has declared an equity dividend of 125.00% amounting to Rs 12.5 per share. At the current share price of Rs 146.80 this results in a dividend yield of 8.51%.

Power Finance Corporation Limited

Power Finance Corporation Ltd. is an Indian financial institution under the ownership of Ministry of Power , Government of India. Established in 1986, it is the financial backbone of Indian Power Sector. PFC is the 8th highest profit making CPSE as per the Department of Public Enterprises Survey for FY 2017–18. PFC is India's largest NBFC and also India's largest infrastructure finance company. Initially wholly owned by the Government of India, the company issued an initial public offering in January, 2007. It is also an ISO 9001:2000 certified company and enjoys the status of Navratna Company in India. The company's reveneue was Rs. 62,189 and Net Profit was Rs. 9455 for year ending March 2020.

 The company has a good dividend track report and has consistently declared dividends for the last 5 years.

For the year ending March 2020 Power Finance Corporation has declared an equity dividend of 95.00% amounting to Rs 9.5 per share. At the current share price of Rs 113.45 this results in a dividend yield of 8.37%.

*Disclaimer: Although the data found here has been produced and processed from third party sources believed to be reliable, no warranty expressed or implied is made regarding accuracy, adequacy, completeness, legality, reliability or usefulness of any information. Any information provided here does not constitute investment advice or investment recommendation. Please do your own research or consult your financial advisor before investing in these stocks.