If you searching for Better Dividend Paying Stocks? Better Dividend Paying Stocks, best dividend paying stocks in India, Better Dividend Paying Stocks for the long-term, best dividend paying stocks 2022 or ITC vs Coal India stocks which is better in regard of better dividend, then please read complete article for detail analysis of these stocks.
Better Dividend Paying Stocks
In a volatile market, dividends are essential for investors. They give investors a return on their investment as well as an income.
They also give employers a reason to boost their profits.
Over a long period of time, dividend-paying companies have been proved to generate higher returns than non-dividend-paying equities.
The true investor will do better if he forgets about the stock market and pays attention to his dividend returns and to the operation results of his companies.
– Benjamin Graham ( father of value investing )
Today, we compare Coal India and ITC and how they fare on various dividend metrics.
Business Overview
- ITC is a diversified company with operations in agri-business, hotels, paperboard and packaging, fast-moving consumer products, and IT.
- The business is the largest FMCG company in the nation and the market leader in the paperboard and packaging sectors in India.
- Through its extensive agri business, it is recognised on a global scale as a pioneer in farmer empowerment. It is India’s leading hotel chain in the hospitality industry.
- ITC had long-term plans to gradually transition to an asset-light approach in the hospitality industry in order to facilitate further growth. The words have just recently been put into practise.
- ITC Infotech, a wholly owned subsidiary of ITC, is a specialised global provider of digital solutions.
- ITC has effectively developed a wide range of powerful brands that are either #1 or #2 during the past ten years. In their respective categories, they are the market leaders.
- The greatest producer of coal worldwide is Coal India, a state-owned coal mining company. The company is situated throughout 8 states in India and operates in 83 mining sites.
- The corporation, an apex body, has 1 mining planning and consulting company and 7 fully owned subsidiaries that produce coal.
- It accounts for 76% of all thermal power producing capacity and over 83% of India’s total coal production.
- It is a Maharatna corporation, a privileged status granted by the Indian government to a select group of state-owned businesses in order to enable them to grow and become global behemoths.
- Despite India’s efforts to promote renewable energy, we think coal will remain popular. As the main supplier of coal to India’s power sector, it plays a crucial role in the country’s economy.
Dividend payout per share
ITC
ITC has historically been seen as a desirable dividend play. Since its inauspicious beginnings in 1994, the business has given investors a larger payout than its competitors.
This is the one thing that makes ITC stand out. The company’s management has established a flexible capital allocation strategy over the years. It has declared that dividend payments will increase to between 80 and 85 percent of its post-tax profits.
ITC started a history of consistently paying dividends in 1994. It distributed a dividend of Rs 8.5 per share, with a roughly Rs 1,009 m total payout.
ITC released approximately Rs 64,695 m in dividends during the most recent financial year 2021–2022 and paid out Rs 11.5 per share in dividends.
To put things in perspective, ITC has been paying dividends continuously since 1994, with no breaks whatsoever.
See the table below to get a sense of ITC’s lengthy dividend-paying history.
High Dividend Payouts with a Growth Rate
COAL INDIA
Though shorter than ITC’s, the company’s dividend history is undoubtedly rich.
Since 2004, Coal India has announced dividends.
High Dividend Payouts with a Growth Rate
If we examine the dividend distribution per share for the two company, ITC has maintained its lead by announcing substantially bigger dividends than Coal India.
In the beginning, ITC’s payouts decreased. ITC, however, has increased its dividend more quickly than Coal India over the last ten years.
Dividend payout per share for Coal India has stayed steady and within a range.
The company’s dividend payouts have not significantly increased over the last ten years. In actuality, during the last eight years, Coal India’s dividend has decreased.
Here is a table comparing the dividend payout per share of the two businesses:
ITC vs Coal India – Dividend Payout Per Share in Recent Years
Dividend Payout Ratio
A company’s dividend payout ratio is calculated by dividing its annual dividend payment by its net profit for the same period.
The market prefers payouts that are either high and consistent or expanding.
Let’s see how both companies perform in this ratio.
ITC
The dividend payout ratio for ITC during the fiscal year 2021–2022 was 93%.
In terms of raising this payout ratio, the business has come a long way. The company’s modest payout ratio during 2003 and 2009 was between 30 and 40%.
The dividend payout ratio hit a all time high of 101% in 2021.
The adjusted dividend that ITC paid to its shareholders between 2018 and 2022 is displayed in the table below.
ITC Dividend Payout Ratio
| Year | FY18 | FY19 | FY20 | FY21 | FY22 |
|---|---|---|---|---|---|
| Dividend per share (Rs) | 5.2 | 5.8 | 10.2 | 10.8 | 11.5 |
| Net profit (Rs m) | 112,712 | 125,923 | 153,062 | 131,612 | 152,427 |
| Dividend payout ratio (%) | 55.8 | 56.0 | 81.5 | 100.5 | 93.0 |
COAL INDIA
In the fiscal year 2021–2022, Coal India’s dividend payout ratio was 60.4%.
Coal India’s dividend payout ratio ranged from 95% to 145% between 2014 and 2018.
The adjusted dividend that Coal India paid to its shareholders between 2018 and 2022 is displayed in the table below.
Coal India Dividend Payout Ratio
| Year | FY18 | FY19 | FY20 | FY21 | FY22 |
|---|---|---|---|---|---|
| Dividend per share (Rs) | 16.5 | 13.1 | 12.0 | 16.0 | 17.0 |
| Net profit (Rs m) | 70,386 | 174,631 | 167,142 | 126,999 | 173,581 |
| Dividend payout ratio (%) | 145.5 | 46.2 | 44.3 | 77.6 | 60.4 |
If we examine the two companies’ dividend payout ratios, they are both performing equally well. The payout ratio for each has remained steady and stable.
ITC vs Coal India – Dividend Payout Ratio (%)
Which dividend stock is better?
When it comes to dividends, both businesses are at their best.
Compared to Coal India, ITC has announced a greater dividend payout per share. The FMCG giant has also increased dividends more quickly than Coal India.
On the basis of dividend yield, Coal India outperforms ITC since it has consistently declared high dividends over the past eight years.
Regarding the dividend payout ratio, both businesses are doing well because it has stayed steady and stable.
ITC, however, is in the lead when we look at the growth potential. Multiple factors are currently moving in a favourable way, creating a lollapalooza effect for ITC.
In conclusion, even though both of these businesses will keep paying dividends, we think ITC will do so at a greater rate. That’s all for this article on Better Dividend Paying Stocks.
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Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.
