In their article in the Business Standard, Jitendra Kumar Gupta and Ram Prasad Sahu point out that we are running through a difficult period and that investors must home in on companies that have consistently reported profits, maintained dividends, generated positive cash flow from operations and earned healthy return on equity (RoE). They have identified five such companies, which not only meet these criteria and offer high dividend yield but also have less debt in the books and, importantly, are also likely to do well in the longer run.
IL&FS Investment Managers
IL&FS Investment Managers operates in the private equity space and runs several thematic funds in infrastructure and real estate, among others. It has grown consistently. At the current market price, IL&FS Investment Managers offers a high dividend yield of 7.1 per cent.
NRB Bearings has been ahead of its peer group in terms of sales and net profit growth over the past three years. At the current market price, NRB Bearings is trading at less than five times its FY14 estimates, with decent cash flows and high dividend yield providing support.
Andhra Bank’s asset quality is stabilising and margins are expected to improve. Andhra Bank
is currently offering a dividend yield of six per cent which is good for a bank with 16 per cent RoE and trading at 0.6 times its estimated book value in FY13.
Gateway Distriparks operates in the container storage, rail transport and cold chain segments and is quoting at reasonable valuations of around eight times FY 2014 earnings and a price to book at 1.5 times. The dividend yield is around 5 per cent.
GNFC has high core RoE, robust internal cash flows and low leverage. Its’ stock valuation of just three times its FY14 estimated earnings is attractive, given the company’s expected growth and strong position in an industry which is less cyclical.
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