Sunday, July 12, 2009

More About High Dividend Yield Stocks:-
The previous post (http://tanmaygopal.blogspot.com/2009/07/dividend-yield-stocks-company-name-ex.html) took care of high dividend yield stocks, this will make sure that we know something about those companies before investing. Always know about a company and its business, then only invest in it :-


TATA CHEM :
http://www.tatachemicals.com/
Established in 1939 at Mithapur (in Gujarat, India), Tata Chem (TCL) is a part of the Tata group. The company is a pioneer and market leader in the Indian branded iodised salt segment and India's leading producer of nitrogenous and phosphatic fertilisers. TCL is a global company with interests in chemicals, crop nutrition and consumer products. It is the world's second largest producer of soda ash. With manufacturing facilities in India, UK, the Netherlands, Kenya and USA, TCL is the world’s most geographically diversified soda ash company. It is a leader in the branded salt market in India with above 50% market share. The company recently ventured into the agri-produce wholesale business called Khet-Se and is also running tests for the new bio-fuel business.


Fundamentals:-
CMP Rs 200 EPS Rs 19.22 (TTM) Book Value Rs 171
In correcting markets, an investor needs to find margin of safety in any stock and that comes from fundamental strength. TATA CHEM is paying Rs 9/share as dividend and that makes it 4.5% dividend yield which is very handsome. The stock is a value buy at current levels trading at around 10 P/E on TTM basis. The price has corrected more than 30% from recent peak at Rs 269 made in June'09 and is cheap even from Price/Book Value approach. The dividend record is crystal-clean for Tata Chem as every year it has paid some dividend and never since 2001-02 the dividend payout has gone below Rs 5/share.


In a recent development, Government of India has said that many fertilizer units in India remain underutilized. Tata Chemicals' Haldea-based plant was able to utilize only 57% of total capacity. "Performance of some of the fertiliser units in the country is below par. The main reason for lower production in urea plants is the limitation of availability of natural gas," the Minister of State for Chemicals and Fertilisers, Srikant Kumar Jena, said in a written reply in the Lok Sabha. The government, however, has decided to accord highest priority in gas allocation to the fertiliser sector for expansion and revival of projects. India's gas worries should come to an end soon as RIL, which is currently producing 31-32 mmcmd, is likely to touch 80 mmcmd in next six months from its KG-D6 gas fields and as per Morgan Stanley the peak output is expected to save India $8.3billion annually on import costs.






Fertilizer industry  is seeking an all-cash subsidy payment instead of a mix of cash and bonds, which sell at discounts, resulting in working capital disruptions and losses. Though it is proposed, it is still a pending matter with government and if finalized, will be a catalyst for Tata Chem.



NIIT TECH :
http://www.niit-tech.com/index.aspx
NIIT Technologies became an independent organisation in 2004, after spinning off from NIIT Ltd. Even though the price history is of just 5 years, NIIT Ltd itself has been into software development since last 15 years. NIIT Tech provides solutions for Banking & Fin Services, Insurance, Travel, Transportation & Logistics and Retail & Distribution segments. 


Fundamentals:-
CMP Rs 96 EPS Rs 19.56 (Year-ended Mar'09) Book Value Rs 51.09
NIIT TECH trades at just 4.9 times its FY09 EPS and is paying Rs 6.5/share as dividend yielding 6.78% which takes it very close to even Post-tax Fixed Deposit returns of nationalized banks. One has to understand that stocks are not like Fixed Deposits but if one takes a longer term view, they can be a bit more than that. Good dividend yield makes sure at least some returns as dividends and if it is a growing company (like NIIT TECH also looks), it helps in capital gains too when broader markets do well.


There were other stocks also in that list, I will just give a table of their fundamentals (just for information purpose):-


Financial Snapshot of High Dividend Yield Stocks
Stock Name
Web Site
EPS (Rs) (TTM)
Book Value (Rs)
P/E Ratio
P/B Ratio
Div Yield (%)
KARUR VYSYA BANK
43.71
250.00
6.59
1.15
4.18
GIC HOUSING FIN
10.61
69.35
7.37
1.13
5.13
HYDERABAD IND
59.08
242.46
4.00
0.97
4.24
JK CEM
20.36
129.35
4.95
0.78
3.47
HAWKINS COOKER
36.15
73.95
8.94
4.37
6.19
ORIENT PAPER
10.17
24.75
4.49
1.85
3.26
HEG
26.30
149.21
7.41
1.31
3.33
CHEVIOT
26.55
369.46
5.92
0.43
3.82


2 comments:

zain khan said...

LG Balakrishna also a high yeilding divident company. face value Rel, and divident paying company. present CMP Rs12.25. divident paid about 80%

jennifer said...

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Margaret

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