Highest Dividend paying companies in Nepal comprises of companies from wide range of sectors. Dividend is paid to shareholders of a company for their investment in a company, and it is usually distributed from a company’s net profit. Companies in NEPSE have already finalized and announced the the dividend (both cash and bonus) for the fiscal year 2077/78.
Dividend is a major point for price fluctuations for shares in Nepal, as they provide cashflow and companies that provide high dividends are considered safe bets. However, high dividend is not the only factor you should consider when you are buying shares of a company in secondary market.
So let’s go over the list of highest dividend paying companies in Nepal.
Highest Dividend Paying Companies in Nepal – Last Dividends.
| Company | Bonus Share | Cash Dividend | Total Dividend |
|---|---|---|---|
| Unilever Nepal Limited [UNL] | 0 | 650% | 650% |
| Himalayan Distillery Limited [HDL] | 75% | 25% | 100% |
| Jeevan Bikas Laghubitta Bittiya Sanstha Limited [JBLB] | 70% | 3.68% | 73.68% |
| Mahila Laghubitta Bittiya Sanstha Ltd. [MLBSL] | 47.5% | 2.5% | 50% |
| Manjushree Finance Ltd. [MFIL] | 40% | 6% | 46% |
| National Microfinance Laghubitta Bittiya Sanstha Ltd. [NMFBS] | 40% | 5% | 45% |
| Forward Microfinance Laghubitta Bittiya Sanstha Ltd. [FOWAD] | 35% | 7% | 42% |
| Nepal Telecom Limited [NTC] | 20% | 20% | 40% |
| Nabil Bank Ltd. [NABIL] | 33.6% | 4.4% | 38% |
| Nepal Lube Oil [NLO] | 30% | 5% | 35% |
NTC, HDL, NLO, UNL have been paying good dividends for quite some time, if you are looking for some reliable and consistent blue chip companies in Nepal, you can consider those companies. NABIL in the only bank in the top 10 highest dividend paying companies list. Majority to the highest dividend paying list is dominated by Laghubitta organizations.
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How and When are Dividends paid?
To get the dividend of a company, you just need to hold the shares till the book closure date. The dividends are distributed on the basis of number of shares of a company you have on the book closure date. After the book closure date, you can sell the shares and you will still receive the dividends for those shares.
Usually in Nepal, the prices of a share rise exponentially as the book closure of a company is approaching. The prices drop immediately following the book closure of the company.
You can receive cash and bonus shares as dividends, we’ll see how bonus shares work as dividend below. You receive bonus shares directly in your Demat account and you received cash dividends directly in the bank account, which is linked with your Demat account.
What is bonus share as dividend?
Most companies in Nepal usually give Bonus share share along with Cash dividend. So what is bonus share? Bonus shares are additional shares that are given to a shareholder. Bonus shares are distributed free of cost, based on the number of shares that the shareholder already owns. If you plan on holding the shares of a company long term, bonus shares will help you to grow your shares of the company and it will also help you grow your cash dividends in the future.
A company may choose to not give their earnings as dividends, but convert them to bonus shares. And these bonus shares are distributed to the shareholders instead of cash. Usually a company used the earnings for further growth, and gives bonus shares as dividend.
Is bonus share as dividend good or bad?
Generally speaking, bonus shares can be beneficial for long term investors of the company. Bonus shares means there will be less or no cash dividend, which might not be good for people looking for cashflow, however it means that the company is looking to reserve cash so that they can focus on further growth. Generally bonus shares increases the faith of shareholders in a company as the cash is used for company growth. Of course, it all depends on how the company performs in the future.
Bonus shares also increases the value position of a company in the market as less cash is withdrawn out of the company.
How much can you make from dividends?
So how much can you really make from dividends? Let give you an example to help you understand better.
In the table of highest dividend paying companies in Nepal above, HDL has given 75% bonus shares and 25% cash shares. Note that 25% cash is not given on the bases of LTP, i.e the current trading or market price of HDL, but it will be given on the basis of par value of the company. You can think of the par value as the price at which the IPO of the company was opened. So in case of HDL, you’ll not receive 25% of current share value(3,490), but you’ll get 25% of par value(100). Let’s calculate the dividends now:
25% of 100 NRs = 25.
Your HDL share holdings = 50, Cash Received = 50*25 = 1250NRs, not much considering the price of HDL currently is 3,490 NRs.
Now how much Bonus Shares will you get?
For this example, we have 50 HDL shares, the company is distributing 75% bonus shares. 75% of 50 is 37.5, let round it to 37 and hence, you’ll now have 87 shares of HDL.
Bonus shares is beneficial in the long run depending that the company performs well. For the example that we considered above, let’s say the next year too HDL distributes the same dividend. That means how we’ll have 87*25 = 2175 NRs as cash dividend, and how shares quantity will increase to 152 (87 Original shares + 65 Bonus shares). Now well have 152 shares of HDL!
In the following years this will keep growing and your cashflow will also keep increasing!
If you hold HDL for 5 years! You’ll have a whopping 820 shares of HDL, and if you still get 25% cash dividend, that means you’ll have 20500 NRs bonus shares, and that’s only from HDL!
So if the company that is issuing the bonus shares performs well, your shares holding and your cashflow from cash dividends will be compounded in the coming years.
Highest Dividend Paying Companies in Nepal – Conclusion
In the list above we’ve seen the top dividend paying companies in Nepal. We’ve can see that most the the top dividend paying companies in Nepal give bonus shares and cash dividends, except for UNL (Unilever Nepal Limited). The highest bonus shares percent is given by HDL(75%) and the highest cash dividend is given by UNL(650%). Most of the companies in the top dividend paying list are Laghubitta organizations.
Since most of the companies in Nepal give both cash dividend and bonus shares, it means that even if the company doesn’t pay much cash dividend or increase it’s cash dividend, your cashflow will increase due to you now owning more shares of the company that was distributed as bonus shares!
So we’ve discussed in detail about the highest dividend paying companies in Nepal and how they can help you increase your wealth. If you have any queries or questions, feel free to comment in the comments! Cheers!
