In FY24, Coal India paid out ₹15,098 crore as dividends alone, more than Zomato’s total income of ₹12,961 crore. Interestingly, both companies have comparable market capitalization.
Both Zomato and Coal India are popular among investors, showing how different ways businesses can create value for investors. While Zomato focuses on reinvesting for growth, Coal India is returning wealth to shareholders through dividends.
In this article, we will explore what are high dividend stocks for 2025 and what investors should look for to identify companies with both stable income streams and long-term growth potential.
What are High Dividend Stocks?
High dividend stocks are referred to stocks of those companies, which distribute a significant portion of their earnings to shareholders as dividends consistently.
Such stocks are preferred by investors looking for a regular income stream and long term wealth creation. Companies that pay steady and high dividends to shareholders mostly operate in mature industries with stable cash flows.
Why Invest in High Dividend Stocks?
Generally, high dividend stocks offer the following benefits to investors:
Steady Income: Offer steady and regular income on investments and generate greater returns, which tend to improve over the long term.
Lower Volatility: High dividend stocks belong to stable and mature companies with strong cash flows. Stocks of such companies often display lower volatility in the stock market and are preferred by investors during challenging market conditions.
Reinvestment Benefits: Investing in high dividend stocks allows you to reinvest the dividends in other high growth stocks or the stock itself to generate higher returns and get the benefits of compounding.
What are the Factors to Consider While Investing High Dividend Stocks for 2025?
The following metrics should be considered while investing in high dividend stocks for 2025:
Dividend Yield: The dividend yield shows how much a company pays dividend to shareholders compared to share price. For example, if the stock is trading at ₹100 and pays an annual dividend of ₹5, then dividend yield will be 5%.
However, if the stock price falls, the dividend yield will rise, which sometimes can be misleading to investors.
Dividend Payout Ratio: Compared to dividend yield, dividend payout ratio is considered a better metric. It shows how much of the company’s earnings are being paid out as dividends. For example, Coal India had a dividend payout ratio of 42% in FY24, which means, Coal India paid 42% of its earnings as dividend to shareholders.
A steady payout ratio suggests the company is balancing shareholder returns with growth opportunities, which is good in the long term.
Dividend Growth: The company should have a history of consistent dividend payments and increase, which indicate financial strength and focus on returning wealth to shareholders.
Earning Stability: The company should showcase consistent growth in earnings to support reliable dividend payments.
Top 5 High Dividend Stocks for 2025
- Infosys
- ITC
- Asian Paints
- IRCTC
- CDSL
The stocks selected are large cap stocks with dividend payout ratio of more than 40% and Return on Capital Employed (ROCE) of more than 30%.
Infosys
Infosys is India’s second-largest IT solutions provider and exporter in terms of revenue that enables clients to execute strategies for their digital transformation and next generation IT solutions.
In the last three financial years, Infosys announced a dividend per share of ₹31, ₹34, and ₹46 respectively, indicating consistent increase in dividend payments.
| CMP (27th December 2024) | ₹1,917 |
| 3 year Compounded Sales Growth | 15% |
| 3 year Compounded Profit Growth | 10% |
| Return on Capital Employed (FY24) | 42% |
| Dividend Payout Ratio (FY24) | 80% |
ITC
ITC is India’s largest diversified conglomerate that operates in five business segments including- FMCG- Others, FMCG- Cigarettes, Hotels, Paperboards, Paper and Packaging, and Agri Business.
In the last three financial years, ITC announced a dividend per share of ₹11.50, ₹15.50, and ₹13.75 respectively.
| CMP (27th December 2024) | ₹479 |
| 3 year Compounded Sales Growth | 13% |
| 3 year Compounded Profit Growth | 16% |
| Return on Capital Employed (FY24) | 37.97% |
| Dividend Payout Ratio (FY24) | 84% |
Asian Paints
Asian Paints is Asia’s largest paint company that specializes in manufacturing, selling, and distributing a wide range of paints, coatings, and home decor products.
In the last three financial years, Asian Paints announced a dividend per share of ₹19.15, ₹25.65, and ₹33.30 respectively.
| CMP (27th December 2024) | ₹2,271 |
| 3 year Compounded Sales Growth | 15% |
| 3 year Compounded Profit Growth | 10% |
| Return on Capital Employed (FY24) | 41.2% |
| Dividend Payout Ratio (FY24) | 60% |
IRCTC
Indian Railways Catering & Tourism Corporation is a state-owned company under the Ministry of Railways that provides online railway tickets, catering services, tourism packages, and packaged drinking water- Rail Neer.
In the last three financial years, IRCTC announced a dividend per share of ₹3.5, ₹5.5, and ₹6.5 respectively.
| CMP (27th December 2024) | ₹779 |
| 3 year Compounded Sales Growth | 77% |
| 3 year Compounded Profit Growth | 94% |
| Return on Capital Employed (FY24) | 46% |
| Dividend Payout Ratio (FY24) | 47% |
CDSL
Central Depository Services Limited is an important player of the Indian stock market, which is a Market Infrastructure Institution. It provides services to all market participants including exchanges, clearing corporations, depository participants (DPs), issuers and investors. CDSL is the largest issuer of the demat account in India.
In the last three financial years, CDSL announced a dividend per share of ₹15, ₹16, and ₹22 respectively.
| CMP (27th December 2024) | ₹1,778 |
| 3 year Compounded Sales Growth | 33% |
| 3 year Compounded Profit Growth | 28% |
| Return on Capital Employed (FY24) | 40.22% |
| Dividend Payout Ratio (FY24) | 70.42% |
Investing in high dividend stocks for 2025 provides a unique opportunity to balance investment yield with growth potential to maximize returns. However, before investing in high dividend stocks for 2025, do thorough research, use different financial tools, or consult registered stock market experts, if needed. The stocks discussed above are not recommendations, and do your own research before investing.
FAQ
Are high dividend stocks risk-free?
Like every stock, high dividend stocks come with risks of market volatility, dividend cuts, and low stock price growth.
What factors should I look at when selecting high dividend stocks?
Before investing in high dividend stocks for 2025, you should analyse the factors like dividend yield, dividend payout ratio, financial stability of the company, and dividend history.
Do high dividend yields always indicate a good investment?
Not always. High dividend yield is also a red flag, indicating the company might be in financial trouble resulting in sharp drop in stock price.
Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
I’m Archana R. Chettiar, an experienced content creator with
an affinity for writing on personal finance and other financial content. I
love to write on equity investing, retirement, managing money, and more.
