Pakistan Stock Exchange is currently trading at one of the lowest valuation levels in the Region. Although, Economic uncertainty still exists, however, a crisis like situation has been averted. This provides an attractive entry point for Investors especially those with Long Term focus. In this article we will discuss “Top Yielding stocks in Pakistan for 2023”.
With Interest Rates peaking at 22 percent, GDP growth declining to 0.5%, Industrial production Bottomed out and Domestic currency taking the battering, the worst stands now behind.
SBP governor has signalled that Interest Rates have peaked, while PKR has gained 5 percent in three weeks. The agriculture production boom in current year is expected to bolster the GDP growth which was otherwise tanked by lower service sector and Industrial production. Analysts believe that worst is over and Pakistani Economy is all set for a growth trajectory going onwards.
Although overall Market Valuation remains low, it is necessary to highlight stocks which are more attractive. Below is the List of Top Dividend Yielding Stocks in Pakistan Stock Exchange (September-2023 Update)
|PSX Symbol||Company|| 1-Year Dividend/Share|
|Price (22-Sep-2023)||Dividend Yield|
|UBL||United Bank Ltd||35.0||146.89||23.83%|
|SCBPL||Standard Chartered Bank Pak||6.0||26.99||22.23%|
|BAFL||Bank Alfalah Ltd||8.5||39.18||21.69%|
|MCB||MCB Bank Ltd||27.0||129.81||20.80%|
|AKBL||Askari Bank Ltd||3.0||15.16||19.79%|
|EFERT||Engro Fertilizer Co||13.5||75.82||17.81%|
|HUBC||Hub Power Co||15.0||86.86||17.27%|
|FFC||Fauji Fertilizer Co||16.0||92.84||17.23%|
|POL||Pakistan Oil Fields||70.0||439.05||15.94%|
|ABL||Allied Bank Ltd||10.5||70.08||14.98%|
|EPCL||Engro Polymer Co||5.5||39.52||13.92%|
“How to Invest in Top Dividend Yielding Stocks”
Investing in top dividend-yielding stocks can be a smart way to generate a steady income stream from your investments. Here are the steps to get started:
- Set Your Investment Goals: Determine your financial goals and risk tolerance. Are you looking for regular income, long-term growth, or a combination of both? Understanding your goals will help you choose the right dividend-yielding stocks.
- Educate Yourself: Learn about dividend investing, how dividends work, and the factors that affect dividend payments. Familiarize yourself with key financial metrics like the dividend yield, payout ratio, and dividend history.
- Research Dividend Stocks: Identify top dividend-yielding stocks by conducting thorough research. Look for companies with a history of consistent dividend payments and a strong financial position. You can use financial news websites, stock screeners, and stock brokerage platforms to find dividend stocks.
- Diversify Your Portfolio: Don’t put all your money into a single dividend stock. Diversify your portfolio by investing in multiple dividend-paying companies across different sectors. This reduces risk and provides stability.
- Evaluate the Dividend Yield: The dividend yield is calculated by dividing the annual dividend payment by the stock’s current price. A higher dividend yield indicates a potentially higher income, but be cautious of extremely high yields, as they may be unsustainable.
- Analyze Dividend History: Look at the company’s track record of dividend payments. Companies that have consistently increased their dividends over several years are often considered more reliable.
- Assess the Payout Ratio: The payout ratio is the proportion of earnings that a company pays out as dividends. A lower payout ratio suggests that the company has room to continue paying and possibly increasing its dividends.
- Consider Financial Health: Review the company’s financial statements, including its balance sheet and income statement. A healthy balance sheet with manageable debt and strong cash flows is a positive sign for dividend stability.
- Stay Informed: Keep up with news and developments related to the companies you’ve invested in. Earnings reports, management changes, and industry trends can impact a company’s ability to pay dividends.
- Choose a Brokerage Account: Open a brokerage account if you don’t already have one.
- Buy Dividend Stocks: Once you’ve done your research and selected dividend stocks that align with your goals, place buy orders through your brokerage account.
- Monitor and Adjust: Regularly review your portfolio and the companies you’ve invested in. Make adjustments as needed based on changes in your financial goals or the performance of your investments.
- Consider Tax Implications: Be aware of the tax implications of dividend income in your jurisdiction. In some cases, dividend income may be taxed at a lower rate than other types of income.
Remember that investing always carries risks, and past performance is not indicative of future results. It’s crucial to do your due diligence and, if necessary, consult with a financial advisor before making investment decisions. Additionally, consider your time horizon, risk tolerance, and overall financial situation when building your dividend-yielding stock portfolio.
“Ensuring Dividend Safety and Growth”
Dividend safety is a critical consideration for investors seeking reliable income from their investments. It refers to the likelihood that a company will continue paying dividends at the current rate or increase them in the future. Here are some key factors to assess and understand when evaluating dividend safety:
- Payout Ratio: The payout ratio is a fundamental metric that indicates the proportion of a company’s earnings paid out as dividends. A lower payout ratio suggests that the company retains more of its earnings for reinvestment or financial stability. Generally, a payout ratio below 60-70% is considered safe, but this can vary by industry and company.
- Dividend History: A company’s track record of dividend payments is a strong indicator of dividend safety. Look for companies with a consistent or growing history of dividend payments over several years. Be cautious of companies that have a history of cutting or suspending dividends.
- Earnings Stability: Assess the stability of the company’s earnings over time. Companies with steady and growing earnings are more likely to maintain dividend payments. Volatile or declining earnings can put dividends at risk.
- Cash Flow Analysis: Examine the company’s cash flow statement to ensure it generates sufficient cash to cover dividend payments. Positive and growing free cash flow is a positive sign for dividend safety.
- Debt Levels: High levels of debt can strain a company’s ability to pay dividends, especially in challenging economic conditions. Check the company’s debt-to-equity ratio and debt service coverage ratio to gauge its debt burden.
- Industry and Economic Conditions: Consider the industry in which the company operates and the broader economic conditions. Industries sensitive to economic cycles or experiencing significant disruption may have higher dividend risk.
- Management’s Commitment: Assess management’s commitment to dividend payments. Company leadership should prioritize shareholder returns and be transparent about the dividend policy.
- Dividend Sustainability: Look for indications that the company’s dividend is sustainable in the long term. This includes evaluating the company’s growth prospects, competitive position, and ability to adapt to changing market conditions.
- Regulatory and Legal Factors: Be aware of any legal or regulatory constraints on dividend payments. Certain industries, such as financial services, may have regulatory requirements affecting dividends.
- Diversification: Diversifying your portfolio by holding a mix of dividend-paying stocks from different sectors can help mitigate the risk of a single company’s dividend cut affecting your overall income.
- Monitoring and Reassessment: Even after you’ve invested in dividend-paying stocks, it’s essential to monitor your holdings and stay informed about company developments, as well as broader economic and market trends. Be prepared to adjust your portfolio if necessary.
It’s important to note that there is no foolproof method for guaranteeing dividend safety, as unexpected events can impact a company’s ability to pay dividends. Therefore, conducting thorough research and maintaining a diversified portfolio are crucial strategies to help enhance the safety of your dividend income. Additionally, consulting with a financial advisor or investment professional can provide valuable insights and guidance in assessing dividend safety.
Latest posts by News Desk (see all)
- Oil Prices down amid Geo-Political Uncertainty - November 1, 2023
- Govt to borrow PKR8.5 trillion in Bond Auction till Jan-2024 - November 1, 2023
- Nishat Chunian Ltd: 1QFY24 profit rises 13 percent to PKR 500mn - October 31, 2023