Investing in the Pakistan Stock Exchange (PSX) to earn dividends is a great way to earn passive income. We will explain the basic principles of dividend investing, the top 50 dividend-paying stocks in Pakistan, and how to build a successful portfolio.
What are a dividend and dividend yield?
It is important to understand what a dividend is in a stock market listing: Whenever a company does business and makes a profit, it distributes a portion of that profit to its shareholders. This is called a dividend.
Dividend Yield: This is the percentage that tells you how much profit a company is paying annually based on the current price of a stock. (Example) If a share is priced at Rs 100 and pays a dividend of Rs 15 per year, then its dividend yield will be 15%.
Top 50 High Dividend Stocks of the Pakistan Stock Exchange
There are several sectors in the stock market that give their investors good returns on a consistent basis. Among them, fertilizers, commercial banks, oil and gas, and power generation sectors are at the top.
Note: Dividend yield also changes with changes in market prices.
Fertilizer Sector
This sector is considered to be the strongest and most stable dividend-paying sector, as the demand for fertilizers in the country is always maintained.
1• FFC: Fauji Fertilizer Company Limited
Very stable, quarterly dividend
2• EFERT: Engro Fertilizers Limited
High payout ratio, best annual record
3 • FATIMA: Fatima Fertilizer Company Limited
Consistent growth and stable profits
Commercial Banking Sector
Pakistani banks take full advantage of interest rates, and their profits are always excellent, a large part of which they give to shareholders.
4 • UBL: United Bank Limited
One of the best dividend-paying banks in the market
5• MCB: MCB Bank Limited
Strong fundamentals and consistent quarterly profits
6• MEBL: Meezan Bank Limited
Pakistan's largest Islamic bank, steady growth
7• BAHL: Bank Al Habib Limited
Track record of stable and long-lasting profits
8 • BAFL: Bank Alfalah Limited
Excellent payouts and consistent performance
9• HBL: Habib Bank Limited
Large bank by volume, consistent payments
10• HMB: Habib Metropolitan Bank Limited
Best dividend history
11 • NBP: National Bank of Pakistan
State-owned banks, impressive profits in recent years
12• AKBL: Askari Bank Limited
Reasonable price and consistent dividend
Oil and Gas Exploration
This sector is linked to the value of the dollar and oil prices in the international market, which is why they have good cash flow.
13 • OGDC: Oil & Gas Development Company
Government company, dividends multiple times a year
14 • PPL: Pakistan Petroleum Limited
Excellent cash flow and regular profits
15• POL: Pakistan Oilfields Limited
High share price but excellent dividend payout
16 • MARI: Mari Petroleum Company Limited
Record of excellent performance and bonus shares
Power generation and distribution
These companies have contracts with the government, which is why their profits are considered secure.
17 • HUBC: The Hub Power Company Limited
The most favorite stock of dividend investors
18• KAPCO: Kot Addu Power Company Limited
History of high dividend yield
19 • EPQL: Engro Powergen Qadirpur Limited
Limited life but high dividend payout
20• NCPL: Nishat Chunian Power Limited
Regular profit distribution
21• NPL: Nishat Power Limited
Stable cash flow
22• SPWL: Saif Power Limited
Consistent performance
Automobiles and Manufacturing
This sector includes companies like Indus Motors, which distribute a large portion of their profits.
23• INDU: Indus Motor Company Limited
One of the highest cash dividend-paying companies in Pakistan
24• ATLH: Atlas Honda Limited
The king of the motorcycle industry, a magnificent payout
25• MTL: Millat Tractors Limited
Stable profits thanks to the agricultural sector
26 • HCAR: Honda Atlas Cars (Pakistan) Limited
The best dividend according to market conditions
Textiles and Pharmaceuticals
Textiles are Pakistan's largest export sector, while pharmaceuticals are always in demand.
27 • NML: Nishat Mills Limited
The biggest and most stable name in textiles
28• ILP: Interloop Limited
Export-oriented, excellent growth plus dividend
29• FTM: Fateh Textile Mills Limited
Regular payouts
30 • ABOT: Abbott Laboratories (Pakistan) Limited
A reputable and high-paying name in the pharma sector
31 • GLAXO: GlaxoSmithKline Pakistan Limited
History of consistent dividends in healthcare
32 • AGP: AGP Limited
Excellent fundamentals and stable cash payouts
Chemicals, Cement, and Real Estate
Cash flow remains consistent in these sectors due to infrastructure and industrial production.
33 • COLG: Colgate-Palmolive (Pakistan) Limited
FMCG sector, expensive shares but consistent profits
34 • LOTCHEM: Lotte Chemical Pakistan Limited
Stable dividend payout
35 • BIFO: Biafo Industries Limited
Commercial explosives, best dividend record
36 • BWCL: Bestway Cement Limited
The most stable dividend-paying commercial company in the cement sector
37 • LUCK: Lucky Cement Limited
Pakistan's largest cement group, strong fundamentals
38 • DCR: Dolmen City REIT
Pakistan's first real estate investment trust, mandatory dividend payout
Sugar, Tobacco, and other Miscellaneous Sectors
The demand for products from these sectors in daily life makes their business model highly sustainable.
39 • PAKT: Pakistan Tobacco Company Limited
Known for paying very high cash dividends
40 • MCTC: Murree Brewery Company Limited
Consistent and long-standing dividend record
41 • UPFL: Unilever Pakistan Foods Limited
Extremely expensive share but record-breaking cash dividend payout
42 • NATF: National Foods Limited
A stable brand in the food sector
43 • SHEL: Shell Pakistan Limited
Better performance in oil marketing
44 • AABS: Al-Abbas Sugar Mills Limited
Track record of excellent profits in the sugar sector
45 • JDWS: JDW Sugar Mills Limited
Strong network and consistent payouts
46 • SYS: Systems Limited
Top stocks in the IT sector: bonus plus dividend
47 • AVN: Avanceon Limited
Technology and automation, regular profits
48• IIL: International Industries Limited
Steel and pipe manufacturing, stable history
49 • AHL: Arif Habib Limited
Brokerage and Financial Services, High Dividend Yield
50 • DEL: Dawood Hercules Corporation Limited
Strong holding company, great dividend payout
How to build a portfolio for dividend investing?
It's not enough to just buy high-dividend-paying stocks; you also need to follow a process to become a smart investor.
Fundamental Analysis
Step 1
Don't just look at the dividend rate; also see if the company's business is profitable. If the company is paying dividends with debt, it won't last long.
Sector Allocation
Step 2
Don't invest all your money in a single company or sector. Divide your capital equally between sectors like fertilizer, banks, and power.
Dividend Reinvestment Plan (DRIP)
Step 3
Instead of spending any dividends you receive in the first few years, buy more shares of the same company. This is called compounding, which increases your wealth rapidly.
Pros and Cons of High Dividend Stocks
While there are numerous benefits to dividend investing, there are also some risks involved that cannot be ignored.
Benefits
Stable cash income: You get a profit in your bank account every few months without having to work or do business.
Protection against inflation: Good companies increase the prices of their products with inflation, which increases their profits and your dividends.
Double profit: You also get dividends, and the share price also increases over time.
Disadvantages
Fear of dividend cuts: If the country's economic conditions are bad or the company is in loss, it may stop or reduce the dividend.
Tax and Zakat: Withholding tax is deducted on dividend income for both filers and non-filers, which also reduces net profit slightly.
FAQs
Is tax applicable to dividends?
Yes, in Pakistan, dividend income is subject to withholding tax of 15% for filers and 30% or more for non-filers (this rate may change as per tax laws).
Can I get dividends every month?
Companies in PSX usually pay dividends on a quarterly, half-yearly, or annual basis. If you create a mixed portfolio of companies that pay dividends in different months, you can get cash flow almost every month of the year.
What is the minimum amount required to invest in the stock market?
You can start with Rs. 5,000 or even Rs. 10,000. You can buy shares of your choice by opening an account with any registered brokerage house.
Summary of Key Terms
If you are new to the stock market, remember these three dates:
Announcement Date: The day the company announces how much dividend it will pay.
Book Closure Date: Shares bought or sold during this date do not receive the current dividend; this is to finalize the record.
X-Dividend Date: The date, usually two days before the book closing. If you want the dividend, you must buy the shares before this date.
Disclaimer
Important Note: This article is prepared for educational and informational purposes only. It should not be considered any kind of financial or investment advice. Investing in the stock market is always subject to risks. Before buying or selling any shares, consult your financial advisor or do your own research (DYOR). The data given in the article may change according to the market situation.