Top 5 High Dividend Yield Stocks to Buy Short-Term: ITC, Castrol & More by MOFSL

In the face of ongoing global trade uncertainties and fluctuating market conditions, investors are increasingly turning to high dividend yield stocks for a sense of stability. According to the renowned domestic brokerage Motilal Oswal, these stocks not only provide a protective cushion for investment portfolios, but they also generate a steady stream of income. Typically backed by strong fundamentals, these companies are known for their reliable dividend payments, making them attractive to investors seeking a safer haven.

Investment Opportunities in Dividend Stocks

Motilal Oswal has curated a list of five robust companies recognized for their consistent shareholder rewards. This diversified portfolio is designed for investors looking to secure potential returns over a six-month period, with an expected yield of 10-15%. Each of these stocks plays a crucial role in this investment strategy.

ITC: A Steady Performer

ITC continues to demonstrate resilience, particularly through its core cigarette business, which has maintained stable performance due to consistent taxation policies. The company recently announced its acquisition of Century Pulp and Paper from Aditya Birla Real Estate for ₹35 billion, which is expected to bolster its presence in the pulp and paper sector, enhancing both capacity and market reach. ITC is projected to offer a 3.5% dividend yield by FY25, making it a compelling option for dividend-focused investors.

Power Grid: Positioned for Growth

With the government forecasting a significant increase in transmission investments amounting to INR 9.16 trillion by FY32 under the National Electricity Policy (NEP) 2032, Power Grid is well-positioned to capitalize on these developments. Despite facing short-term margin pressures, the company boasts a hefty order book of INR 1.43 trillion, ensuring long-term growth potential. Analysts estimate a 3% dividend yield for FY25, suggesting a solid investment opportunity.

Coal India: Dominating the Energy Sector

As one of the largest coal producers in India, Coal India is set to benefit from a robust energy demand outlook. The Central Electricity Authority (CEA) anticipates that peak power demand may reach 270 GW between March and June 2025, with projections soaring to 363 GW by FY30. Currently trading below its 10-year historical average, the recent stock price correction presents an attractive entry point, offering an impressive 7.1% dividend yield for FY25.

Hindustan Petroleum Corporation Limited (HPCL): Navigating Market Challenges

With recent declines in oil prices, HPCL stands to improve its gross marketing margins, particularly following a ₹50 price hike by the government. The company is also gearing up for significant developments, including the demerger and potential listing of its lubricant business. Analysts predict a 17% return on equity (RoE) in FY26, indicating that current valuations may offer a great investment opportunity.

Castrol: Capitalizing on Market Trends

The drop in Brent Crude prices to a four-year low of $60 per barrel has created favorable conditions for lubricant companies like Castrol. This situation is expected to enhance profit margins for Castrol, which aims for growth rates above the industry average of 4-5%. With a strong focus on brand development and product innovation, the company anticipates a 6.5% dividend yield for FY25.

Market Overview

In today’s trading session, major indices are showing signs of stability, with the Nifty trading slightly above the 23,350 mark. As of 12:25 IST, the S&P BSE Sensex has gained 43.68 points, or 0.06%, reaching 76,783.23, while the Nifty 50 has climbed 24 points, or 0.10%, to 23,352.55. Notably, the broader market has outperformed the main indices, with the S&P BSE Mid-Cap index rising by 0.57% and the S&P BSE Small-Cap index surging by 0.91%.