Introduction
For Indian investors seeking a steady stream of income, dividend-paying stocks have long been a go-to option. Among these, high dividend yield stocks under ₹500 offer an appealing combination of affordability and income generation, especially for retail investors and beginners in the stock market.
This article dives deep into some of the best high dividend yield stocks trading below ₹500 in India as of 2025, helping you make smart, income-oriented investment choices.
What Are High Dividend Yield Stocks?
A dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its stock price. It is calculated as:
Dividend Yield (%) = (Annual Dividend / Current Share Price) × 100
High dividend yield stocks typically offer yields above the market average (often 3% or more), and they are favored by income-focused investors, especially retirees and conservative investors.
Why Invest in High Dividend Yield Stocks Under ₹500?
There are several reasons why investors are increasingly interested in this category:
✅ Affordability
Stocks under ₹500 are more accessible to small investors and ideal for portfolio diversification.
✅ Steady Income
These stocks can generate passive income, which is useful during volatile market conditions or inflationary periods.
✅ Stability and Value
Many of these companies are mature, cash-rich businesses with consistent performance and lower downside risk.
Top High Dividend Yield Stocks Under ₹500 in India – 2025
Here’s a curated list of top high dividend yield stocks priced under ₹500. These are based on the latest data available up to 2025.
Note: Dividend yields may vary depending on market price fluctuations and company announcements.
| Stock Name | Sector | Price (Approx.) | Dividend Yield (%) | Market Cap |
|---|---|---|---|---|
| Coal India Ltd. | Mining | ₹480 | 7.5% | Large Cap |
| Oil India Ltd. | Oil & Gas | ₹430 | 6.8% | Mid Cap |
| REC Ltd. | Financial Services | ₹450 | 6.5% | Large Cap |
| NLC India Ltd. | Energy | ₹220 | 6.2% | Mid Cap |
| Hindustan Zinc Ltd. | Metal & Mining | ₹475 | 5.9% | Large Cap |
| ONGC Ltd. | Oil & Gas | ₹240 | 5.5% | Large Cap |
| PFC Ltd. | Financial Services | ₹250 | 5.3% | Large Cap |
| SJVN Ltd. | Power Generation | ₹115 | 5.0% | Small Cap |
| NMDC Ltd. | Mining | ₹175 | 4.8% | Mid Cap |
| MOIL Ltd. | Mining | ₹195 | 4.5% | Small Cap |
Detailed Overview of Selected High Dividend Stocks
Let’s explore a few top picks from the list above:
1. Coal India Ltd.
- Sector: Mining
- Dividend Yield: ~7.5%
- Why Consider:
A government-owned behemoth, Coal India is one of the largest coal producers globally. With strong cash flows and low debt, it consistently offers attractive dividends.
2. REC Ltd. (Rural Electrification Corporation)
- Sector: Financial Services
- Dividend Yield: ~6.5%
- Why Consider:
REC funds infrastructure projects and is backed by the government. It has a healthy loan book and consistently pays dividends to shareholders.
3. Oil India Ltd.
- Sector: Oil & Gas
- Dividend Yield: ~6.8%
- Why Consider:
A PSU engaged in the exploration and production of oil and gas. It enjoys solid profitability and shareholder rewards in the form of dividends.
4. NLC India Ltd.
- Sector: Energy
- Dividend Yield: ~6.2%
- Why Consider:
A diversified PSU involved in lignite mining and power generation. With strong asset backing and government patronage, it maintains a good dividend track record.
5. SJVN Ltd.
- Sector: Hydro Power
- Dividend Yield: ~5.0%
- Why Consider:
SJVN’s consistent dividend payout stems from stable hydroelectric generation. It’s a good pick for defensive, income-seeking investors.
Advantages of High Dividend Stocks Under ₹500
| Advantage | Explanation |
|---|---|
| Low Entry Barrier | Affordable for retail investors to start SIP-style investing in equities. |
| Income with Capital Protection | Offers regular cash returns while maintaining long-term capital. |
| Portfolio Diversification | Helps balance high-risk growth stocks or mutual funds. |
| Favorable for Retirees | Acts like a monthly or annual income supplement. |
| Reinvestment Opportunities | Dividends can be reinvested in other stocks or used to accumulate more shares. |
Things to Watch Before Investing
While high dividend yield stocks offer many benefits, it’s essential to assess the following before investing:
🔍 Dividend Sustainability
Check the payout ratio. If a company is paying more than it earns (i.e., >100%), it might not sustain dividends for long.
🔍 Company Fundamentals
Always review revenue growth, profitability, debt levels, and overall financial health.
🔍 Sector Stability
Some sectors like utilities or oil may be cyclical or face regulatory risks. Diversification helps reduce that.
🔍 Tax Implications
Dividends are taxed as per the investor’s income tax slab. Factor this into your post-tax returns.
Sample Portfolio for ₹10,000 Investment
Here’s an example of how an investor can build a small high dividend yield portfolio with ₹10,000:
| Stock | Allocation (%) | Investment (₹) | Expected Dividend Yield (%) | Estimated Annual Dividend (₹) |
|---|---|---|---|---|
| Coal India | 25% | ₹2,500 | 7.5% | ₹187.5 |
| REC Ltd. | 20% | ₹2,000 | 6.5% | ₹130 |
| SJVN Ltd. | 15% | ₹1,500 | 5.0% | ₹75 |
| Oil India | 20% | ₹2,000 | 6.8% | ₹136 |
| MOIL Ltd. | 20% | ₹2,000 | 4.5% | ₹90 |
| Total | 100% | ₹10,000 | — | ₹618.5 |
This is a simplified example. Actual results may vary depending on market prices and dividend declarations.
Tips to Maximize Returns from Dividend Stocks
- Reinvest Dividends: Use a DRIP (Dividend Reinvestment Plan) or manually reinvest to compound returns.
- Monitor Announcements: Stay updated on dividend declaration dates, record dates, and ex-dividend dates.
- Combine with Growth Stocks: While these offer income, pairing them with growth stocks adds capital appreciation.
- Review Annually: Track dividend consistency and company fundamentals each year.
Conclusion
Investing in high dividend yield stocks under ₹500 is an excellent strategy for Indian investors looking to generate passive income while maintaining affordability. These stocks often come from strong public sector companies with a history of rewarding shareholders.
However, smart investing means going beyond just dividend yield. Always look at the bigger picture — a strong balance sheet, sustainable business model, and sector outlook. When done right, these stocks can be the cornerstone of a stable, income-focused portfolio in 2025 and beyond.
FAQs – High Dividend Stocks Under ₹500
Q1. Are high dividend stocks safe to invest in?
Yes, especially when chosen from fundamentally strong and stable sectors. Always check the payout sustainability.
Q2. Is ₹500 a good entry point for these stocks?
Yes. It allows small investors to accumulate shares over time and build long-term wealth.
Q3. How frequently do these companies pay dividends?
Most pay annually or semi-annually, and some even quarterly depending on profits.
Q4. Can dividends be reinvested?
Yes. You can manually reinvest or use dividend reinvestment options offered by some brokers.