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Dividend paying stock picks
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stribution rights for the sales of Nokia’s GSM phones (even as 50 per cent of the distribution rights have been returned back to Nokia), mainly the replacement market for GSM phones.
Plans to enter into distribution alliance with Kodak and Apple are also taking shape. At Rs 129.80, the stock trades at 5.8 times CY09 (June ending) estimated earnings and offers a dividend yield of 6.31 per cent.
LIC Housing Finance
LIC Housing Finance is among the top five housing finance players in the country. LIC Housing derives over 90 per cent of its income from loans disbursed to retail customers.
Since the past two years, the company has turned aggressive in terms of growing its business, improving efficiencies and enhancing its risk management capabilities.
Compared to 10 per cent net income growth largely seen earlier, net income has risen 17 per cent and 41 per cent while profit growth has been robust at 34 per cent and 39 per cent in FY07 and FY08, respectively.
For Q1FY09, net interest income grew 43 per cent to Rs 150 crore and net profit was up 124 per cent to Rs 105 crore (partly due to lower provisioning) compared to Q1FY08.
Its non-performing assets (NPAs) declined from 7 per cent in FY05 to about 1 per cent in FY08. Even as the macro environment has turned difficult, analysts don’t expect net NPA levels to rise significantly.
Notably, its net interest margins (NIMs) have remained robust at over 2.8 per cent in FY08 (2.4 per cent in FY07), as the company has been able to pass on the increase in costs and a large part of the loans given are on floating basis.
While NIMs are expected to remain at current levels, the company’s loan book and disbursals are likely to grow by 25 per cent annually in the next two years; profits growth seen between 20-25 per cent.
The company’s foray into distribution of third party products through its subsidiary should add to its income and profits. The stock is up 30 per cent in one week (after announcement of Q1 results) to Rs 306. Investors may hence, like to wait for some correction before buying.
Varun Shipping
Varun Shipping has been paying dividend consistently Its annualized dividend has gone up from 15 per cent in FY01 to 50 per cent in FY08. Post stockmarket correction, its stock is attractively valued at just 4 times its estimated FY09 earnings and offers a dividend yield of 7.8 per cent.
The company owns a well diversified fleet of 21 vessels, which includes 12 LPG carriers, 3 double hull Aframax crude tankers, a product tanker and 5 AHTS vessels.
Since Varun is a leading player in LPG transportation accounting for 70 per cent of all PSU-controlled incoming LPG cargoes, it will benefit from the growing investments in the oil and gas sector. Also, Varun will stand to gain on the growing demand for the energy in India and its dependence on the imports.
Not only volumes, rising freight rates on account of higher demand and shortage of vessels should lead to higher margins. A part of this is also visible in its PBIDT margins, whic |
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