Best Mid Cap Dividend Stocks: Every investor has one goal when investing in an asset – To receive a decent return on their investment. How they would receive the dividend is dependent on the type of investor you are, and stocks give returns through two main routes – Capital appreciation and dividends.
Capital appreciation refers to the gain from the price difference between buying price and selling price. Dividends, on the other hand, are non-obligatory rewards given to shareholders when a company makes profits.
They are paid out at different times during the year, at the discretion of the board of the company. In this article, we’re going to take a look at the best mid-cap dividend stocks in India. Read below for a brief analysis of the same.
Best Mid Cap Dividend Stocks in India
Let us take a look at the best mid cap dividend stocks in India and learn about business along with financial position:
Best Mid Cap Dividend Stocks #1 – NMDC
NMDC or National Mineral Development Corporation is an Government Of India undertaking, and is the largest iron ore producer in India. The company is involved in various mining operations in India for different minerals, such as copper, iron, limestone, magnesite, diamond and tungsten, among others. The company also operates the only mechanized diamond mine in south-east Asia.
Financials Of NMDC
| CMP | ₹ 106 | Market Cap (Cr.) | ₹ 31,314 |
| EPS | ₹ 19.1 | Stock P/E | 6.65 |
| ROCE | 21.1 % | ROE | 16.3 % |
| Face Value | ₹ 1.00 | Book Value | ₹ 77.2 |
| Promoter Holding | 60.8 % | Price to Book Value | 1.53 |
| D/E Ratio | 0.02 | Dividend Yield | 13.8 % |
| Net Profit Margin | 26.3 % | Operating Profit Margin | 34.3 % |
NMDC is a mid-cap company by size, under the government of India. For FY 23, NMDC earned ₹17,667 crores and a net profit of ₹5603 crores. However, FY 22 still remains the best financial year for NMDC, as the company brought in ₹25,882 crores in revenues and ₹9398 crores in net profits.
The company has high operating profit margins between 26-40 percent in recent years. FY 23 saw the company’s sales, margins and net profits fall from the previous year.
The company has positive return ratios, with ROE at 16.3 percent and ROCE at 21.1 percent. The stock P/E of NMDC is 6.14, whereas its industry P/E is twice that at 12.
NMDC has one of the highest dividend yields among mid-cap stocks, at 13.8 percent. It also has a low and safe level of debt, with a D/E ratio of 0.02.
Promoters of NMDC is the Government of India, which owns a 60.8 percent stake, down from 68.2 percent in June 2021. The share price of NMDC has fallen slightly by 8.5 percent in the past 5 years.
Best Mid Cap Dividend Stocks #2 – SAIL
At #2, we have another Government Of India undertaking, Steel Authority of India Ltd. SAIL is one of the largest steel manufacturing companies in India, and is classified as a Maharatna company under the Central Public Sector Enterprises. It has a pan-India presence with 5 integrated steel plants, 3 special steel plants, and over 50 products.
Financials Of SAIL
| CMP | ₹ 82.2 | Market Cap (Cr.) | ₹ 34,867 |
| EPS | ₹ 5.27 | Stock P/E | 17.6 |
| ROCE | 5.95 % | ROE | 3.64 % |
| Face Value | ₹ 10.0 | Book Value | ₹ 131 |
| Promoter Holding | 65.0 % | Price to Book Value | 0.62 |
| D/E Ratio | 0.58 | Dividend Yield | 10.7 % |
| Net Profit Margin | 1.46 % | Operating Profit Margin | 7.7 % |
SAIL is one of the most important PSUs for the Indian government. It earned ₹1,04,448 crores in FY 23 and ₹1,03,477 crores in the previous fiscal year (FY 22). Profits for 2023 were ₹2,177 crores and FY 22 saw the company earn ₹12,243 crores in net profits.
Despite steady sales, the company’s net profits have fallen significantly year on year. SAIL has a very good dividend yield of 10.7 percent, making it the 2nd best mid-cap dividend stock in India.
The stock P/E of SAIL at 17.6 is quite higher than that of its industry (12.1), showing that the stock price is overvalued compared to its industry. The return ratios of SAIL are quite low , at 3.64 (ROE) and 5.95 percent (ROCE).
SAIL has an acceptable D/E ratio of 0.56, well within the ideal range of 0-1. Government Of India, the main promoter of SAIL, owns 65 percent of SAIL, down from 75 percent in December 2020. In the past 5 years SAIL has given a positive and low return of 14.2 percent.
Best Mid Cap Dividend Stocks #3 – Oracle Financial Services
Oracle Financial Services is an IT company that provides financial software solutions and outsourcing services to the financial sector. It is part of the much larger Oracle group, an American IT giant. The company services over 140 countries and manages the billing of $500 billion or $0.5 trillion in revenue.
Financials Of Oracle Financial Services
| CMP | ₹ 3,579 | Market Cap (Cr.) | ₹ 30,957 |
| EPS | ₹ 209 | Stock P/E | 17.2 |
| ROCE | 35.1 % | ROE | 24.8 % |
| Face Value | ₹ 5.00 | Book Value | ₹ 863 |
| Promoter Holding | 73.0 % | Price to Book Value | 4.13 |
| D/E Ratio | 0.01 | Dividend Yield | 6.30 % |
| Net Profit Margin | 31.7 % | Operating Profit Margin | 43.4 % |
Oracle Financial Services is a mid-cap IT stock, currently sized at a market cap of ₹30,957 crores. For FY 23, Oracle Financial earned ₹5,698 crores in revenues and ₹1,806 crores in net profits. Sales growth of the company has been slow, at just 4.7 percent in the past 5 years. In FY 19, the company earned ₹4,959 crores and profits of ₹1,386 crores.
Despite low sales growth, the company is profitable and debt free. They have phenomenal return ratios – ROE (24.8 percent) and ROCE (35.1 percent). The company has a high dividend yield as well, at 6.2 percent, making it an ideal dividend stock in the midcap category.
Promoters of Oracle Financial hold a 73 percent stake with no drastic movement. In the past 5 years, Oracle Financial Services has shed (-8.07 percent) in share price.
Best Mid Cap Dividend Stocks #4 – Oil India
Oil India is one of many petroleum processing and refining companies under the Government Of India. The Navratna company can date its roots back to 1889, when India first discovered oil. Oil India is the country’s 2nd largest national E&P company. It was officially incorporated on 18th February 1959, for the exploration of the oil fields in North-Eastern India.
Financials Of Oil India
| CMP | ₹ 266 | Market Cap (Cr.) | ₹ 27,842 |
| EPS | ₹ 80 | Stock P/E | 3.16 |
| ROCE | 26.9 % | ROE | 25.3 % |
| Face Value | ₹ 10.0 | Book Value | ₹ 355 |
| Promoter Holding | 56.7 % | Price to Book Value | 0.77 |
| D/E Ratio | 0.48 | Dividend Yield | 5.44 % |
| Net Profit Margin | 27.3 % | Operating Profit Margin | 42.3 % |
In FY 23, Oil India has earned higher revenues and net profits than its previous financial year. FY23 revenues of the company were ₹36,097 crores and net profits were ₹9,854 crores. To compare, FY 22 saw the company earn ₹25,906 crores in sales and ₹6,719 crores in net profits. The company has a healthy dividend yield of 5.4 percent, making it a good dividend-paying midcap stock.
Return ratios are also quite positive, and the company has a much lower P/E ratio of 3.16 than its industry P/E (13.5). The debt to equity ratio is also well within the acceptable range at 0.48. Promoters of Oil India own a majority stake of 56.7 percent in the company with no change in holdings. In the past 5 years, Oil India has given a positive yet underwhelming return of 24.3 percent.
Best Mid Cap Dividend Stocks #5 – REC
REC was incorporated in 1969 as an answer to the drought issues in a time where most citizens relied on farming and agriculture for their livelihood. The company is a Maharatna CPSE, under the Ministry Of Power. The infrastructure company finances projects in the power sector, which includes generations, transmission and distribution. They work with both state and central governments across the 22 offices of the company across India.
Financials Of REC
| CMP | ₹136 | Market Cap (Cr.) | ₹ 35,772 |
| EPS | ₹ 42.4 | Stock P/E | 3.25 |
| ROCE | 9.14 % | ROE | 20.4 % |
| Face Value | ₹ 10.00 | Book Value | ₹ 221 |
| Promoter Holding | 52.6 % | Price to Book Value | 0.6 |
| Industry P/E | 4.98 | Dividend Yield | 8.46 % |
| Net Profit Margin | 28.3 % | Operating Profit Margin | 95.3 % |
For the financial year ending 2023, REC earned ₹39,478 crores, and a net profit of ₹11,167 crores. The revenues are almost the same as last year, with a slightly positive difference in profits. Overall the company has had a slow sales growth of just 11.7 percent in 5 years.
It has maintained a healthy profit growth of 20.2 percent CAGR in the past 5 years. The company has a very good and high ROE of 20.4 percent, and a low ROCE of just 9.14 percent. Given the fact that company’s business is into financing, its major expenses are interest payments.
The P/E ratio of REC is 3.25, whereas its industry P/E is 4.98, hinting that the stock is currently underpriced compared to its industry. REC has a substantially high dividend yield of 8.46 percent among mid-cap companies. The promoter of REC, the Power Finance Corporation, owns a 52.6 percent stake in the company. REC has given a positive yet low return of 54.2 percent in the past 5 years.
List Of Top Mid Cap Dividend Stocks in India
| Company | Market Cap | Current Price | Dividend Yield |
|---|---|---|---|
| NMDC | 31210.9 | 106.5 | 13.84 |
| SAIL | 33952.9 | 82.2 | 10.65 |
| Oracle Financial Services | 31016.1 | 3586.2 | 6.28 |
| Oil India | 28899.4 | 266.5 | 5.44 |
| Sun TV Network | 17351.5 | 440.3 | 3.41 |
| HDFC AMC | 37843.0 | 1773 | 2.71 |
| Indraprastha Gas | 33663.0 | 480.9 | 2.69 |
| Mphasis | 37419.1 | 1985.9 | 2.51 |
| Colgate-Palmolive | 43383.1 | 1595.05 | 2.49 |
| Bayer Crop Science | 18466.7 | 4109 | 2.43 |
Takeaway
Dividend stocks are great investment opportunities for the shareholders who always like getting extra benefits from their investments. But what they don’t realize is that every time a company is giving out profits as dividends, it takes money away from expansion and growth of the company, which gives its competitors an upper advantage. That’s why you shouldn’t use dividends as the only metric when making investing decisions. Hope that helps in the future. Happy Investing.
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