Dividend stocks: ITC to Castrol - MOFSL picks five high dividend yield shares to buy for short-term

Indian stock market: Amid ongoing global trade uncertainties and market volatility, high dividend yield stocks can provide a sense of stability for investors. 

As per domestic brokerage Motilal Oswal, these stocks offer a cushion of safety for investment portfolios while delivering steady income. Typically, they are supported by solid fundamentals and a history of consistent dividend payments by the companies.

Dividend stocks to buy

Motilal Oswal has assembled a portfolio of five financially strong companies known for consistently rewarding their shareholders and likely to continue doing so in the near future. Each company holds an equal weight in the portfolio, which comes with a recommended investment horizon of six months and a projected return of 10–15%.

ITC

ITC’s core business of cigarettes has shown steady performance. With stable taxes on cigarettes, we anticipate sustainable growth in this business. ITC has announced acquisition of Aditya Birla Real Estate's paper business, 'Century Pulp and Paper' (CPP), as going concern on a slump sale basis for 35Bn. It strengthens ITC's presence in pulp and paper industry, expanding its capacity & market reach. ITC is expected to have 3.5% FY25 dividend yield.

Power Grid

With the government adjusting its transmission capex estimate to INR9.16t till FY32 as per NEP 2032, company is strategically positioned to leverage these investments as the NEP represents a significant commitment to capacity expansion and the advancement of clean energy technologies. Despite near-term margin pressure, a strong order book (INR1.43t) and steady project wins, support long-term growth. It has FY25E dividend yield of 3%.

Coal India

The energy demand outlook remains robust for medium-to-long term as CEA projects peak power demand in summer to hit 270GW over Mar-Jun'25 (~363GW by FY30). COAL produces over 75% of India's coal, with 80% supplied to the power sector, making it a dominant player. Recent stock correction offers an attractive valuation, trading at below its 10-yr historical average. This has led to attractive dividend yield of 7.1% for FY25E.

HPCL

Oil price decline due to OPEC+ output hike and US tariffs is likely to improve HPCL’s gross marketing margins along with Rs50 price hike by the Center, will help offset ₹76b LPG under-recoveries. Key triggers include the demerger and potential listing of the lubricant business, commissioning of the bottom upgrade unit in Q4FY25, and Rajasthan refinery launch in CY25. With expected FY26 RoE of 17%, current valuations look attractive.

Castrol

Brent Crude has fallen to its 4-year low at $60 per barrel amid US-China trade tensions and rising supply. This is beneficial for lubricant companies like Castrol, leading to improved profit margins. For its lubricant business, it is targeting above industry average growth rate of 4-5%. Castrol's focus on brand building, distribution, and new products supports its market leadership. Company is expected to have dividend yield of 6.5% for FY25.

Stock market today

The key benchmark indices hovered around the flat line with a slight positive tilt in early afternoon trade. The Nifty edged just above the 23,350 level, while media stocks continued their upward momentum for the third straight session.

As of 12:25 IST, the S&P BSE Sensex rose by 43.68 points or 0.06% to 76,783.23, and the Nifty 50 climbed 24 points or 0.10% to 23,352.55.

Broader markets outperformed the main indices, with the S&P BSE Mid-Cap index gaining 0.57% and the S&P BSE Small-Cap index surging 0.91%.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.