Top 4 Debt-Free Stocks, Upto 6.78% Dividend Yield To Check, When Interest Rate Is Rising

The RBI is raising the repo rate in India, and investors are looking forward to the debt-free stocks to invest in for safeguarding their portfolios. Here, 4 such debt-free stocks, their CMP, and dividend yields have been discussed.

Castrol India and Bajaj Consumer

Castrol India's current market price (CMP) is Rs. 107.55. The company has announced a 5.69% dividend yield for FY22. The company's price-to-earnings ratio (P/E) is 14.03, and its market capitalization is Rs. 10,667 crore. The company's net sales stood at Rs. 1,235.70 crore in March 2022, up 8.52% from Rs. 1,138.70 crore in March 2021., also its quarterly net profit stood at Rs. 228.40 crore. Castrol India produces high-performance oils, lubricants, fluids, and greases for cars, motorcycles, etc. This debt-free company's dividend yield is quite high to increase the investors' profitability.

Bajaj Consumer's current market price (CMP) is Rs. 149.40. The company has announced a 6.78% dividend yield for FY22. The company's price-to-earnings ratio (P/E) is 12.83, and its market capitalization is Rs. 2,202 crore. However, the company has reported a 34.47% fall in consolidated net profit to Rs. 35.82 crore in Q4FY22. Also, Bajaj Consumer's revenue from the sale of goods stood at Rs. 214.95 crore, fell 12.21%. Bajaj Consumer Care Ltd., part of the Bajaj Group of Companies, is one of India's well-established FMCG companies in the beauty care category in hair care, skincare and hygiene products, with international footprints.

VST Industries and Oracle Financial Services

VST Industries' current market price (CMP) is Rs. 3200.00. The company has announced a 3.56% dividend yield for FY22. The company's price-to-earnings ratio (P/E) is 15.43, and its market capitalization is Rs. 4,945 crore. The company's net sales stood at Rs. 302.64 crore in March 2022, an increased 8.82% from Rs. 278.12 crore in March 2021. Additionally, its quarterly net profit of Rs. 87.19 crore, up 19.72%, and EBITDA stood at Rs. 123.77 crore, up 18.35%. The Vazir Sultan Tobacco Company Limited, renamed VST Industries has its head-quarter in Hyderabad. The Company has a manufacturing facility in Hyderabad and Toopran (Telangana) and its principal activities are the manufacture & sale of cigarettes and unmanufactured tobacco.

Oracle's current market price (CMP) is Rs. 3,224.00. The company has announced a 5.84% dividend yield for FY22. Its market capitalization is Rs. 27,780 crore. Oracle Financial Services is a subsidiary of the US-based Oracle Corporation. The company is into banking and insurance software. The company reported a superb set of quarterly numbers. This company has declared a dividend of 3800% of Rs. 190 per share for FY 2022. Even fundamentally Oracle financial Services is a good stock to buy, given that p/e levels are just around 15 times trailing EPS. The company can also enhance its dividends in the future as profitability improves. So, the stock is also a good pick in terms of its dividend yields, good for long-term investors.

Company	Dividend Yield
Castrol India	5.69%
Bajaj Consumer	6.78%
VST Industries	3.56%
Oracle	5.84%

 

Importance Of Debt Free Stocks When The Interest Rate Is Rising

The interest rates are being raised by the major central banks, globally, including the US. India is not an exception regarding this, the RBI has recently hiked its key lending rate, the repo rate by 40 basis points to 4.40%. Analysts are expecting that some more repo rate hikes are on the way in the country. The central banks are rising the rates to control inflation. However, why is it important to invest in debt-free companies when the rate is being raised and the stock markets are already under pressure? Debt-free companies are liable to repay their debts via loans. With the rate hike, the interest rates on debts will increase for a company, affecting its profitability. With a down-gradation in a company's profitability, the share prices can fall significantly. So, for investors, it will be wise to look out for debt-free stocks, that are not liable to pay back their debts with interest.

Disclaimer

Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution. Greynium Information Technologies, the author, and the brokerage house are not liable for any losses caused as a result of decisions based on the article. This article only incorporates the recent stock-related information about the companies.

(Data reported till last traded on May 20, 2022)