When it comes to stock trading in Pakistan Stock Exchange, the majority of market players are day traders. The day trading approach focuses on high volume shares; high liquidity and high volatility are major factors for any day trader to step in. Usually these shares are moving on speculative news and it is highly unlikely if there would be any fundamental rationale like higher earnings or better dividend yields.
Taking by the book approach on stock market investments, dividend paying stocks should be the major reason for an investor to jump into it. Now the question persists that should one be just invest in stock because it pays a high dividend, a financial analyst would disagree. Financial expert rely on a measure of dividend yield when screening such stocks.
Dividend yield is calculated by dividing, dividend paid with current price. It’s an instant measure which tells the actual return on the stock as compared to its current price. For example there are two shares; one has paid the dividend of Rs. 100 while the other pays the dividend of Rs. 10. Normally a trader would invest in share paying dividend of Rs. 100 annually. Now let’s assume that the current price of the first share is Rs. 1,000 and price of 2nd share is Rs. 20, the dividend yield for the first would be 10 percent while dividend yield of the 2nd share would be 50 percent.
This shows that the stock with dividend yield of 50 percent offers the dividend return of 50 percent as compared to its price making it a highly attractive investment. Based on this school of thought we have screened the top 5 stocks in Pakistan Stock Exchange with highest dividend yields. Following are high dividend yield stocks in Pakistan’s stock market which usually go unnoticed.
Shadab Textile SHDT closed at Rs. 29 as on August 21st, 2020. The stock comes with strong fundamentals as the share price is currently trading at Price to Earnings of mere 1.19 times. Trailing 12 months the share price is trading with a dividend yield of 34.90 percent. Dividend yield of year 2019 stood at 8.60 percent as compared to 2.98 percent in the last year. The high cash dividend of Rs 5.20 and 453 percent right issue took Shadab Textile’s dividend yield to one of PSX’s highest. SHDT has maintained an average dividend of Rs. 3.43 per share in last 05 years.
Al-Abbas Sugar Mills AABS is currently trading its historical highs of Rs. 317 as on August 21st, 2020. Share price touching its historical high is also backed by strong fundamentals as the company has maintained the average cash dividend paid of Rs. 30.10 per share for last 5 years. AABS is trading on dividend yield of 26.66 percent trailing twelve months. The company dividend yield stood at 25.25 percent for the year 2019 as compared to 25.51 percent in 2018.
Altern Energy Limited or ALTN closed on Rs. 26 in today’s session having a dividend yield of 25.11 percent trailing twelve months. In last 05 years, Altern Energy paid a cash dividend only for 02 financial years making an average of Rs. 1.40 per share; however its last payout was Rs. 2.65 for the years ending December 31st, 2019.
Kot Addu Power Company Limited KAPCO is well known share with considerable trading average volume. The share price last closed on Rs. 27.78 and is trading on a dividend yield of 23.33 percent trailing 12 months. The company has maintained an average cash dividend amount of Rs. 8.09 per share in last 5 years. Looking at last 02 years history the stock’s dividend yield stood at 12.37 percent as compared to dividend yield of 16.97 percent in 2018.
Ghani Value Glass Limited GVGL comes with strong fundamentals and is trading on a stock price of 42.75 as per its last trading session. Trailing last 12 months its dividend yield stands at 20.11 percent. In last five years the company has actually paid dividend 03 financial years making an average of Rs. 2.20 per share, however its last cash dividend paid was Rs. 3 for the period ending December 31st, 2019. In 2019 GVGL’s dividend yield stood at 19.05 percent as compared to dividend yield of 7.69 percent for the year 2018.