These stocks under Rs 50 with dividend yields are beating bank saving rate

Investors looking for comfort and safety of just keeping money in their savings bank accounts have seen the payout dwindling over the years as the interest rate cycle went downwards. Most banks brought down the interest rates they provide on basic savings accounts to around 3-3.5% over the last one-two years.

But there are other options with slightly higher risk.

Those willing to take the additional risk of investing in low-priced stocks, including penny stocks, need not only depend on trading to make money. In some cases, the dividend yields in such stocks too beat the interest rate offered by banks.

Companies which are generating profits share part of the surplus cash pumped out from the business to reward their shareholders as dividends. These bring additional gains for investors even if the share price has remained static.

Some conservative investors and indeed even mature ones pick stocks that have a generous dividend policy. This tends to keep liquidity and adds to total returns they can churn from a single investment.

One of the ways to pick stocks that reward shareholders over and above the price movement is to look at dividend yields. In simple terms, it is the payout being shared with stockholders as a percentage of the stock price.

We scanned through the list of high dividend yield stocks based on the current price and dividend payout over the last one year.

If we look at stocks priced under Rs 50 and with dividend yields in the 4% plus range we get a list of 18 stocks.

These include names like Geojit Financial, NHPC, HUDCO, Saven Technologies, Union Bank of India, Ircon International and Suumaya Industries.

Others in the list include IL&FS Investment, Sri KPR Industries, Gothi Plascon, Suumaya Corporation, Standard Industries, Oswal Green Tech, SJVN, PTL Enterprises, Rail Vikas Nigam, TCFC Finance and Choksi Imaging.

Notably, investors should not look at high dividend yield stocks as a safe pick as they may still lose money if the share price goes down and they are forced to sell it for liquidity purpose. Moreover, the companies may reduce the dividend in the future.