Highest Dividend Paying Penny Stocks in India: A Detailed Guide
Every investor looks for two things in the market – generating income and growth of one’s capital when it comes to stock market investing. Though dividend world is ruled by blue-chip stocks, a massive number of investors are now diving into penny stocks in India that offer substantially high dividend yields.
This blog dives into the highest dividend paying penny stocks in India, which will in turn help low priced stocks that don’t just assure hypothetical growth but also passive income through dividends.
Why Invest in Dividend-Paying Penny Stocks?
Penny stocks are often considered speculative and risky but when a small-cap company with with a low share price pays out dividends, it adds a additional layer of shareholder trust and financial stability. Some of the reasons why dividend-paying penny stocks are attractive:
1. Low Entry Barrier
Since these stocks are priced low, even small investors can purchase them in bulk, diversifying their portfolio without needing significant capital.
2. Dividend Income
Even if the price doesn’t appreciate significantly, dividend payouts ensure a return on investment in the form of passive income.
3. Growth Potential
These companies may grow rapidly, turning into multi-baggers over time. Investors benefit both from capital appreciation and regular income.
List of Penny Stocks in India That Pay High Dividends
Here’s a list of penny stocks in India known for consistent dividend payouts, ideal for investors looking for yield in a volatile segment.
Top 10 Penny Stocks in India Offering High Dividends
1. National Aluminium Company Limited (NALCO)
- Stock Price: Around ₹120 (borderline penny)
- Dividend Yield: 7%–9%
- Sector: Metals
NALCO, a public sector enterprise, regularly ranks among the highest dividend paying penny stocks in India. It’s a favorite among conservative investors in the penny segment.
2. PTC India Ltd
- Stock Price: Around ₹100
- Dividend Yield: 5%–6%
- Sector: Power Trading
PTC India is a power trading firm that has established a reputation for stable financials and generous dividend payouts, making it a solid penny stock option.
3. SJVN Ltd
- Stock Price: ₹90 approx.
- Dividend Yield: 6%–8%
- Sector: Power
SJVN, another government-backed company, consistently pays dividends. With stable operations and a focus on green energy, it has long-term potential.
4. IRCON International Ltd
- Stock Price: ₹130 (near penny threshold)
- Dividend Yield: 4%–6%
- Sector: Infrastructure
While technically a little above the traditional penny range, IRCON is included due to its market cap and dividend record.
5. MOIL Ltd
- Stock Price: ₹180
- Dividend Yield: 3%–5%
- Sector: Mining
MOIL is a key manganese ore producer and has rewarded its shareholders with regular dividends, even in challenging market conditions.
6. Hindustan Copper Ltd
- Stock Price: ₹180 approx.
- Dividend Yield: 3%–5%
- Sector: Mining
Hindustan Copper has shown consistent growth in operations and maintained steady dividend payouts, making it a worthy mention.
7. Andrew Yule & Co Ltd
- Stock Price: ₹34
- Dividend Yield: 3%–4%
- Sector: Conglomerate
This diversified PSU has rewarded shareholders even when its market value fluctuated. It often features in the list of penny stocks in India for dividend investors.
8. South Indian Bank
- Stock Price: ₹24
- Dividend Yield: 1.5%–3%
- Sector: Banking
A relatively risky pick, South Indian Bank has still paid out dividends in multiple financial years, making it attractive to risk-tolerant investors.
9. India Tourism Development Corporation (ITDC)
Stock Price: ₹80
Dividend Yield: 2%–3%
Sector: Hospitality
ITDC operates in a niche government-controlled sector and pays dividends occasionally, depending on performance.
10. Rail Vikas Nigam Ltd (RVNL)
- Stock Price: ₹150
- Dividend Yield: 2%–4%
- Sector: Railways/Infrastructure
RVNL is involved in rail infrastructure projects and is known for regular dividend payments.
These top 10 penny stocks in India combine the benefits of affordability and dividend returns, making them viable picks for passive income seekers.
How to Choose the Right Dividend-Paying Penny Stock
Investing in dividend-paying penny stocks requires diligence. Here are key factors to evaluate:
1. Dividend History
Look at the consistency of dividend payments over the past 3–5 years. Frequent disruptions may signal financial instability.
2. Financial Ratios
Check the dividend payout ratio, profit margins, and return on equity. These metrics help you gauge if the company can sustain future payments.
3. Industry Outlook
Choose companies from growing sectors like power, infrastructure, or metals. These sectors often yield better long-term returns.
4. Government Ownership
Many high-dividend penny stocks are Public Sector Undertakings (PSUs). Government backing often ensures greater stability.
Risks of Investing in Penny Stocks with Dividends
While the opportunity for high returns exists, investors should also be aware of the risks:
- Market Volatility: Penny stocks tend to be more volatile than large-cap companies.
- Liquidity Risk: You may find it hard to sell your shares in low-volume stocks.
- Dividend Cuts: Dividends are not guaranteed. Economic downturns can lead to reduced or suspended payouts.
- Limited Analyst Coverage: Many penny stocks are not widely tracked, making research more difficult.
Why Investors Often Overlook Dividend-Paying Penny Stocks
When one mentions dividends, the first thing that comes to our mind is large-cap blue chip companies. Although, there is a hidden niche segment in Indian stock market where relatively smaller companies trading at a very low price known as penny stocks reward their shareholders with consistent dividend payouts. These businesses usually remain under the radar due to their smaller market cap and market exposure, but when dived deep into the fundamentals one can observe that they generate solid returns.
Many penny stocks are often risky and speculative and they are deeply influenced by market volatility and abrupt surges but dividend paying penny stocks are different because they have a proper business structure backing them. Most of them operate in sectors such as fertilizers, mining and power- areas that have strong demand regardless of economic ups and downs.
Another advantage is that these stocks are affordable to small investors. Someone with a modest budget can still accumulate a decent quantity of shares and benefit from regular income. While capital appreciation might be slow, the dividend yield can be a reliable cushion during volatile times.
To truly benefit from such stocks, one must combine fundamental analysis with patience. Long-term value often hides in places others ignore—and dividend-paying penny stocks might just be one of them.
Conclusion
Large-cap blue chip stocks are usually the talk of the show when one talks about investing, but that is when the dividend-paying penny stock presents an opportunity. If invested in these stocks by doing thorough analysis and critical due diligence, investors can reap benefits from these with capital growth and consistent passive income.
If one is looking for affordable investment with upside growth and consistent returns, diving into highest dividend paying penny stocks in India may align with one’s financial goals.
However, not everything is flowers and glitter because with every great opportunity comes great responsibility. One should never invest in penny stocks without thorough analysis of the company, seeing where the industry outlook is heading and the history of dividend payouts. One should adopt a diversified strategy mixed with calculated informed choices.
Also Read : How to Buy Unlisted Shares in India – Easy Guide
FAQ'S
What is the main benefit of investing in high-dividend penny stocks?
These stocks offer passive income through capital growth along with passive income through dividends and therefore they are attractive.
Are penny stocks safe for dividend investing?
Penny stocks are considered risky but if chosen carefully by doing a thorough analysis of the company, they can reap benefits for the investors by offering them good returns. One should include only a small chunk of their portfolio towards such stocks.
How can I find the top dividend-paying penny stocks?
Check stock screeners, financial websites, and annual reports. Focus on companies that are profitable, consistent, and preferably government-owned for extra safety.
How often do these companies pay dividends?
Most Indian companies pay dividends once or twice a year. You’ll find the schedule in the company’s annual report or on stock exchange websites.
