Top 5 Dividend-Paying Multibagger Stocks

As investors, we invest in stocks for capital appreciation. We gain from them when the stock price goes up.

However, to earn a regular income and a hedge against volatility, most of us also diversify into dividend-paying stocks.

We invest in a different set of stocks for different needs.

But what if I told you there are stocks that have the potential to grow your capital and also pay regular dividends?

Some stocks can be the best of both worlds. These are multibagger dividend paying stocks.

Such stocks appreciate in value, give multibagger returns during a bull phase, and pay consistent dividends acting as a hedge against market volatility.

Using Equitymaster's Indian stock screener, we have shortlisted five such stocks.

Here's the list...

#1 Indian Energy Exchange

Indian Energy Exchange is India's first and largest energy exchange.

The company's shares have zoomed more than 260% in the last three years.

IEX is a power exchange that enables efficient price discovery of the power market in India. It provides a trading platform for the physical delivery of electricity.

The company enjoys a monopoly in the energy exchange market with more than 95% market share.

Indian Energy Exchange currently allows its participants to trade in electricity/power in the block of 15 minutes, intra-day contracts, day-ahead contracts, and daily contracts.

It also allows participants to trade in renewable energy certificates and energy-saving certificates.

The company recently launched Indian Gas Exchange, India's first gas exchange and is working on launching a coal exchange.

It has been paying dividends consistently for the last three years. Its three-year average dividend payout is 52.9%.

Indian Energy Exchange's revenues are increasing steadily. Over the past three years, its total revenue has grown at a compound annual growth rate (CAGR) of 17.7% driven by growth in trading volumes.

The company's net profit has grown at a CAGR of 20.5%. It also has a very high net profit margin which averaged 68.7% in the last three years.

The company's return on equity (RoE) stands at 44.6% in the financial year 2022. Moreover, being a zero-debt company, it has scope to expand through leverage.

Going forward, the company's launch of longer-duration contracts and growing power consumption are expected to drive its revenue growth.

To know more about Indian Energy Exchange, checkout its factsheet and latest quarterly results.

#2 Balaji Amines

Balaji Amines is a leading manufacturer of speciality and fine chemicals in India.

Over the past three years, the share price of Balaji Amines has gone up by 140%.

The company specialises in manufacturing methylamines, ethylamines, derivatives of speciality chemicals, and pharma excipients. It has a diversified product portfolio and has a monopoly in most of the products its manufactures.

Balaji Amines has five manufacturing plants with a total capacity of 231 thousand metric tons (MT).

Its products are used by various sectors, including pharmaceuticals, agrochemicals, oil & gas, and textiles.

Apart from a strong domestic presence, it has a global presence across 50 countries.

Recently the company entered the electric mobility space. It will be commissioning a greenfield project to manufacture dimethyl carbonate (DMC) and propylene glycol (PG), chemicals that have an application in producing lithium batteries.

It will be the only manufacturer in the country to manufacture these chemicals and plans to export them to other countries.

Balaji Amines has been consistent in paying dividends to its shareholders. Over the last three years, the company paid its shareholders an average of 6.9% dividend.

The company's revenue has also grown at a healthy rate of 35.3% (CAGR) driven by high volumes and better capacity utilisation. Net profit jumped 62.4% (CAGR) during the same time.

Its RoE improved to 33.4% in the financial year 2022 against 27.2% the previous year.

The company has planned a capex of Rs 3-3.5 bn over the next two years for new and existing chemicals. This will drive its revenue growth in the medium term.

To know more about Balaji Amines, checkout its factsheet and latest quarterly results.

#3 Deepak Fertilisers

Established in 1979, Deepak Fertilizers is one of India's largest manufacturers of fertilisers and industrial chemicals.

The stock delivered multibagger gains in the last three years, and its price has rallied from Rs 78 to Rs 915 at present.

Its product portfolio spans industrial chemicals, crop nutrition, and mining chemicals. The company also offers value-added real estate, India's largest destination for home interiors.

Deepak Fertilizers is a market leader in producing several products, including nitric acid, isopropyl alcohol, and bentonite sulphur.

Some sectors that use the company's products are pharmaceuticals, mining, cosmetics, agriculture, and agrochemicals.

Its key clients include Cipla, Ambuja Cement, and ACC.

Deepak Fertilizers has been changing its product mix to include more products under its crop nutrition business.

The company has been consistently paying dividends over the last three years. Its dividend payout ratio for the financial year 2022 stood at 21.5%.

Strong growth in the chemicals segment has helped the company grow its revenues at a CAGR of 17.3% in the last three years. The net profit also jumped 97.5% (CAGR). As a result, its RoE also grew to 17.7% in the financial year 2022 as against 4.2% two years back.

Change in the product mix, headroom availability of additional capacities, and greenfield expansions are expected to drive the company's long-term growth.

To know more about Deepak Fertilizers, checkout its factsheet and latest quarterly results.

#4 Alkyl Amines

Alkyl Amines is a leading manufacturer of aliphatic amines, amine derivatives, and speciality chemicals.

Its shares have surged 115.5% in the last three years.

The company has over 100 products in its portfolio and holds leadership positions for most of them, including acetonitrile and triethylamine.

Currently, the company manufactures its products in over twenty plants spread across three manufacturing sites in India, with a total installed capacity of 158,000 tons.

Its products are used in pharmaceuticals, agrochemicals, mining, paint, and personal care industries, among others.

Along with a strong domestic presence, Alkyl Amines also exports its products to over 50 countries.

The company has been very consistent in paying dividends to its shareholders. Its three-year average dividend payout ratio is 12.6%.

High volumes have led to growth in revenues. The revenue grew at 15.9% CAGR in the last three years. Net profit grew modestly by 4.5% CAGR as the high input costs were not compensated with price increases.

As a result, the RoE also contracted to 22.8% in the financial year 2022 against 36.8% two years ago.

Going forward, a strong market position, expansion in capacities, and price increases will drive revenue and profit growth in the medium term.

To know more about Alkyl Amines, checkout its factsheet and latest quarterly results.

#5 Laurus Labs

Laurus Labs is a fully integrated pharmaceutical and biotechnology company.

The company's shares have soared more than 100% over the last three years.

It is engaged in manufacturing a broad portfolio of active pharmaceutical ingredients (API), intermediates, and generic finished dosage forms.

The company also provides contract research services to the global pharmaceutical industry.

Laurus Labs' product portfolio is concentrated on high-growth therapeutic areas such as anti-retroviral, hepatitis C, and oncology.

It has nine manufacturing sites producing over 60 products for some of its key clients, such as Mylan, Aurobindo Pharma, and Natco.

So far, it has 184 patents and 73 drug master files (DMF) under its name.

Currently, the company is concentrating on cutting costs and adding capacity through backward integration.

Laurus Labs has consistently increased its dividends during the last three years despite incurring capex for expansion. Its three-year average dividend payout is 8.63%.

Growth in contract manufacturing drove the revenues up, and they grew at a CAGR of 20.4% over the last three years. Net profit also zoomed by 48.3% (CAGR) during the same period. The RoE stood at 24.9% against 14.5% two years ago.

The company plans to expand its capacity and product portfolio, which would be the key factor for growth in the medium term.

To know more about Laurus Labs, checkout its factsheet and latest quarterly results.

Be smart while investing in multibagger dividend paying stocks

While the words 'multibagger' and 'dividend' sound alluring in one sentence, there is always a 'but' that you shouldn't ignore.

All the stocks we mentioned have run up a lot. However, one cannot guarantee how long they will sustain their multibagger tag.

Instead, focus on the fundamentals. A company with a good foundation, experienced management team and strong growth prospects has better chances to grow in the long term. Such stocks can be good investment bets.

Moreover, fundamentally strong companies usually pay good dividends. However, it is important to check the company's dividend history and its ability to pay dividends in the future too.

Sometimes even fundamentally strong stocks can be affected due to short-term market volatility. Hence concentrate on staying invested long-term to ride out the market volatility.

By following this strategy, the chances of you making money on your investments will be high.

Happy investing!

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...