Top Dividend Stocks: TCS, Nestle, HUL, Infosys, Bajaj Auto — Returns, Valuations Explained

Assessing dividend-paying stocks requires investors to examine both historical returns and current valuations. Several companies have delivered significant returns, according to data compiled by NDTV Profit from Prime Database.

While companies like TCS and Infosys exhibit attractive valuations alongside strong dividend histories, others such as HUL and Nestle appear overvalued despite strong returns, signalling varied investment potential, the data showed.

TCS stands out with the highest cumulative dividend payment of Rs 649.5 per share over the last decade. It also registered a solid return of 145.74% since April 1, 2015.

With a one-year forward PE ratio of 21.04 and a five-year average PE of 29.12, its valuation is relatively attractive, suggesting a return potential of 18%, according to Prime Database. Additionally, TCS has a history of consistent dividend payouts, with a total of 46 dividends, including 32 interim, 10 final, and 4 special dividends, along with share buybacks.

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Bajaj Auto presents an interesting case with the highest return of 351.21% since April 1, 2015, alongside a cumulative dividend of Rs 610 per share. Despite this, its current valuation metrics, with a one-year forward PE of 25.77 against a five-year average of 24.17, indicate a minimal return potential of 0.4%, according to Prime Database.

Infosys paid out a cumulative dividend of Rs 313.5 and delivered a return of 177.78%. Its valuations appear favourable, featuring a one-year forward PE of 21.27 compared to a five-year average of 26, suggesting a return potential of 15.4%, according to Prime Database.

HUL, on the other hand, paid a cumulative dividend of Rs 308.5 with a return of 196.7%. Its valuations, however, show a one-year forward PE of 53.59 times against a five-year average of 54.92 times, suggesting a negative return potential of 7.7%, Prime Database data showed.

Similar to HUL, Nestle's current valuation, with a one-year forward PE of 64.26, suggests a negative return potential of 5.6%. This indicates the stock may be overvalued due to past performance.