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The Indian market has been flat over the last week but is up an impressive 45% over the past year, with earnings forecast to grow by 17% annually. In this dynamic environment, identifying dividend stocks that offer a stable income stream and potential for capital appreciation can be a prudent strategy for investors seeking to balance growth and income.

Top 10 Dividend Stocks In India

Click here to see the full list of 18 stocks from our Top Indian Dividend Stocks screener.

Below we spotlight a couple of our favorites from our exclusive screener.

Bharat Petroleum

Simply Wall St Dividend Rating: ★★★★★☆

Overview: Bharat Petroleum Corporation Limited focuses on refining crude oil and marketing petroleum products both in India and internationally, with a market cap of ₹1.51 trillion.

Operations: Bharat Petroleum Corporation Limited generates revenue primarily from its Downstream Petroleum segment, amounting to ₹5.07 billion, and from Exploration & Production of Hydrocarbons, which contributes ₹1.92 billion.

Dividend Yield: 6%

Bharat Petroleum's dividend yield of 6.02% ranks it among the top 25% of Indian dividend payers, supported by a low payout ratio of 33.3%, indicating dividends are well covered by earnings and cash flows. Despite this, its dividend history is volatile over the past decade. The company trades at a favorable price-to-earnings ratio of 7.9x compared to the broader market, although high debt levels and recent regulatory issues may pose challenges for stability in future payouts.

• Click here to discover the nuances of Bharat Petroleum with our detailed analytical dividend report.

• Our valuation report unveils the possibility Bharat Petroleum's shares may be trading at a discount.

Swaraj Engines

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Swaraj Engines Limited manufactures and sells diesel engines, components, and spare parts for tractors in India, with a market cap of ₹38.29 billion.

Operations: The company's revenue is primarily derived from the sale of diesel engines, components, and spare parts for tractors, amounting to ₹14.37 billion.

Dividend Yield: 3%

Swaraj Engines' dividend yield of 3.01% places it in the top 25% of Indian dividend payers, yet its dividends have been volatile over the past decade, with a high cash payout ratio of 122%, indicating poor coverage by cash flows. Despite trading at a favorable price-to-earnings ratio compared to the market, recent regulatory challenges and leadership changes may impact future stability. Earnings growth remains strong, but sustainability concerns persist due to insufficient free cash flow coverage.

• Dive into the specifics of Swaraj Engines here with our thorough dividend report.

• Our expertly prepared valuation report Swaraj Engines implies its share price may be lower than expected.

Union Bank of India

Simply Wall St Dividend Rating: ★★★★☆☆

Overview: Union Bank of India offers a range of banking products and services, with a market cap of ₹908.25 billion.

Operations: Union Bank of India's revenue primarily comes from Corporate/Wholesale Banking at ₹440.12 billion, Retail Banking Operations - Other Retail Banking Operations at ₹397.16 billion, Treasury Operations at ₹317.49 billion, and Retail Banking Operations - Digital Banking Operations at ₹10.23 billion.

Dividend Yield: 3%

Union Bank of India offers a dividend yield of 3.03%, ranking it among the top 25% of Indian dividend payers, though its dividends have been volatile over the past decade. Despite a low payout ratio of 18.8%, suggesting strong earnings coverage, past shareholder dilution and high non-performing loans (4.7%) pose risks. Recent labor disruptions could affect operations, but earnings growth remains robust with net income rising to ₹36.42 billion for Q1 2024 from ₹32.72 billion a year earlier.

• Click to explore a detailed breakdown of our findings in Union Bank of India's dividend report.

• Our comprehensive valuation report raises the possibility that Union Bank of India is priced lower than what may be justified by its financials.

Next Steps

• Investigate our full lineup of 18 Top Indian Dividend Stocks right here.

• Already own these companies? Bring clarity to your investment decisions by linking up your portfolio with Simply Wall St, where you can monitor all the vital signs of your stocks effortlessly.

• Maximize your investment potential with Simply Wall St, the comprehensive app that offers global market insights for free.

Contemplating Other Strategies?

• Explore high-performing small cap companies that haven't yet garnered significant analyst attention.

• Fuel your portfolio with companies showing strong growth potential, backed by optimistic outlooks both from analysts and management.

• Find companies with promising cash flow potential yet trading below their fair value.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Companies discussed in this article include NSEI:BPCL NSEI:SWARAJENG and NSEI:UNIONBANK.

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