Okay, investing in India may be difficult for foreigners who are not an Indian citizen. Anyhow, this may serve as a comparison to those previous countries I have discussed. As a foreigner, you can invest in India through purchasing either of the following: American depositary receipts (ADRs), exchange traded funds (ETFs), and/or mutual funds.
Anyhow, let us start.
Using the topyields website (http://www.topyields.nl/Top-dividend-yields-of-NSE.php), I was able to pick these four companies.
Remember: this is not how you should start researching for a worthy stock investment, but it helps to get a general ‘feel’ on how a limited group (4) companies in a foreign exchange is performing in terms of their annual/quarterly payouts.
Please see this link in a new tab for me to explain the importance of considering dividends when purchasing stocks (https://perennialinvesting.wordpress.com/2015/10/03/in-the-philippines-which-company-has-a-good-recent-performance-of-handing-out-dividends/)
I am writing this as of 9/26/2015.
Coal India looks appealing at this early stage with a high 6.50% yield. Whereby it just means that the company is giving 6.50% of its earnings to its shareholders.
Dividend Payout Ratio. This is how much a company gives back to its shareholders from their earnings. There are two ways to get this value. First, dividend per share over earnings per share. The other is retrieving the total amount of dividend provided and divide it with the company’s net income. I’ll use the latter. I prefer this number to be <80%.
*sifting through different financial statements, I cannot seem to locate Vedanta’s numbers. After researching, it appears that Vedanta is merging with Cairn India. So I had to replace Vedanta with the next top yielder Steel Authority of India with 3.77% dividend yield (lower than Oil and Natural Gas company).
Coal India appears to be overpaying their shareholders with >100% (red flag) of their earnings being given away. Interestingly, it gave 242,430 million INR or 3,664 million USD in 2014 while ‘just’ having 2,074 million USD in net income.
Did Coal India gave too much to its shareholders that time?
Yes, 1 Billion USD over its 2014 earnings.
All the others met the <80% metric.
Dividend computed annual growth rate (CAGR; Past 5 years). As an investor, I want to put my money where a company can grow its dividend consistently and has a previous track record. There are only a few (I think) companies in the Philippines who are able to do this when compared to stocks in the U.S. or Canada.
For example, Coke Cola (KO) has been giving dividends year in and year out, recessions, booms and bust, for 52 consecutive years. Royal Bank of Canada (RY) has been paying dividends to its loyal shareholders since 1870’s. Over time, their dividends had grown.
Well, it appears that both CAIRN INDIA and OIL and Natural Gas Company had not given any dividends 5 years ago (2011)-at least according to my research.
Anyhow, Coal India gave a tremendous growth, which supports my assumption that it ‘over-provided’ to its shareholders recently. Steel Authority of India, on the other hand, showed a 6.12% CAGR decline.
Nice to know information: Coal India had given a 5-year average of 2,139 million USD to its shareholders, while Steel Authority Of India had given a 5-year average of 133.84 million USD.
The Debt to equity ratio (D/E). Yes, we see this again. I personally require DE to be seen most of the time in several of my metrics. I would require <0.5. the lesser, the better.
D/E ratio revealed that both Cairn India and Coal India would not need to worry very much about their debts. Furthermore, all of the four companies actually pass the <0.5 metric.
Nice to know information: Coal India has a total debt of 60.74 million USD, while Steel Authority Of India has 4,346 million USD.
Okay, I guess we’ll stop here. If you are interested in learning about companies giving dividends in the Philippines or Hong Kong, click on the next parts of this blog.
A quote to go by
“Do you know the only thing that gives me pleasure? It’s to see my dividends coming in.” – John D. Rockefeller
Disclosure: I do not have shares in any of the companies mentioned in this article and don’t plan to initiate purchase within the next 24 hours. I would not receive any compensation for doing this article. I am not a professional financial analyst. This is just a hobby. Lastly, my work is not error-free, but I strive for it to be. Do not consider as a buy or sell advice. Invest at your own risk.
If you are interested in this similar approach to investing and would seek updates, I wish to invite you to this Facebook group SEEKING VALUE (https://www.facebook.com/groups/SeekingValue/?ref=bookmarks)
Part 1: Which Company Shares I Should Buy, Now that the Fed Kept Rates Unchanged?
Part 2: S&P500, Philippine Stock Market, Hong Kong, India, and the Fed Funds Rate.
Part 3: In the Philippines, Which Company has a Good Recent Performance of Handing out Dividends.
Part 4: In Hong Kong, Which Company has a Good Recent Performance of Handing out Dividends.