Top 4 Debt-Free Stocks, Up to 6.78% Dividend Yield to Check When Interest Rate Rises
Castrol India and Bajaj Consumer
The current market price of Castrol India (CMP) is Rs. 107.55. The company has announced a dividend yield of 5.69% for FY22. The price to earnings (P/E) ratio of the company is 14.03 and its market capitalization is Rs. 10,667 crores. The company’s net sales stood at Rs. 1,235.70 crore in March 2022, up by 8.52% from Rs. 1,138.70 crore in March 2021. Its quarterly net profit stood at also at Rs. 228.40 crores. Castrol India produces high performance oils, lubricants, fluids and greases for cars, motorcycles etc. The dividend yield of this debt-free company is high enough to increase profitability for investors.
The current market price (CMP) of Bajaj Consumer is Rs. 149.40. The company has announced a dividend yield of 6.78% for FY22. The price to earnings (P/E) ratio of the company is 12.83 and its market capitalization is Rs. 2,202 crores. However, the company reported a 34.47% decline in its consolidated net profit to Rs. 35.82 crores in Q4FY22. Furthermore, Bajaj Consumer’s revenue from sale of goods stood at Rs. 214.95 crore, fell by 12.21%. Bajaj Consumer Care Ltd., part of the Bajaj group of companies, is one of the well-established FMCG companies in India in the beauty care category in hair care, skin care and hygiene products , with international footprints.
VST Industries and Oracle Financial Services
The current market price (CMP) of VST Industries is Rs. 3200.00. The company has announced a dividend yield of 3.56% for FY22. The price to earnings (P/E) ratio of the company is 15.43 and its market capitalization is Rs. 4,945 crores. The company’s net sales stood at Rs. 302.64 crore in March 2022, an increase of 8.82% from Rs. 278.12 crore in March 2021. Additionally, its quarterly net profit of Rs. 87.19 crores, up 19.72%, and EBITDA stood at Rs. 123.77 crores, up 18.35%. Vazir Sultan Tobacco Company Limited, renamed VST Industries, is headquartered in Hyderabad. The Company has a manufacturing plant in Hyderabad and Toopran (Telangana) and its principal activities are the manufacture and sale of cigarettes and unmanufactured tobacco.
The current market price of Oracle (CMP) is Rs. 3,224.00. The company has announced a dividend yield of 5.84% for FY22. Its market capitalization is Rs. 27,780 crores. Oracle Financial Services is a subsidiary of the American company Oracle Corporation. The company specializes in banking and insurance software. The company released a stunning set of quarterly numbers. This company has declared a 3800% dividend of Rs. 190 per share for the financial year 2022. Even fundamentally, Oracle Financial Services is a good stock to buy, given that p/e levels are just 15 times below EPS. The company may also increase its dividends in the future as profitability improves. Thus, the stock is also a good choice in terms of dividend yield, good for long-term investors.
Importance of Debt-Free Stocks When Interest Rate Rises
Interest rates are raised by major central banks around the world, including the United States. India is no exception in this regard, the RBI recently raised its key rate, the repo rate, by 40 basis points to 4.40%. Analysts expect further repo rate hikes to be on the way in the country. Central banks raise rates to control inflation. However, why is it important to invest in debt-free companies when rates are rising and stock markets are already under pressure? Non-indebted companies are required to repay their debts through loans. With rising rates, interest rates on debts will rise for a business, affecting its profitability. With a deterioration in a company’s profitability, stock prices can fall significantly. So, for investors, it will be wise to look for debt-free stocks, which are unlikely to repay their debts with interest.
Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author, and the brokerage are not responsible for any losses caused as a result of decisions based on the article. This article only includes recent stock market information on the companies.
(Data reported up to last transaction on May 20, 2022)