3 IT Stocks with ‘Highest’ Dividend Yield!

The IT space has been one of the worst-performing sectors for the year with the index delivering a negative one-year return of 20.2%. This is the index-level drawdown, many individual IT stocks are clocking even higher negative returns than this. 

Such sectoral weaknesses make investors think about dividend stocks that could at least offset some of these notional losses with their decent dividend payouts. In that vein, I have listed three IT stocks with a market capitalization of over INR 1,000 crores that are trading at the highest dividend yield.

Hinduja Global Solutions Limited

Hinduja Global Solutions Ltd (NS:) is engaged in business process management and has a market capitalization of INR 5,106 crores. The company’s principal activity includes IT-enabled services (ITES) – business process outsourcing. On the valuation front, the stock is trading at a P/E ratio of a mere 0.84, which is surprising, considering the industry’s average of 25.82.

Coming to the dividend yield, the company gave a dividend of INR 220 per share in FY22, translating into a dividend yield of a massive 18.01%. Investors need to note that this was a one-of-a-kind payout and the company generally does not pay such a high dividend. However, as it is clocking a net income CAGR of 102.4% over the last 5 years, the dividend payout has consistently increased since FY19.

Oracle Financial Services Software Limited 

Oracle Financial Services Software Ltd (NS:) provides IT solutions to the banking and finance industry, catering to the needs of corporate, retail, investment banking and treasury operations. It has a market capitalization of INR 26,152 crores and trades at a P/E ratio of 13.85. 

In FY22, the company paid a hefty dividend of INR 190 per share, which gives it a dividend yield of 6.27%, beating the interest on most of the FDs. The management also maintains a very high payout ratio of close to 0.9. In FY20, the ratio stood at 1.06, meaning the company distributed more dividends than its net earnings.

Accelya Solutions India Limited

Accelya Solutions India Ltd (NS:) provides software solutions to the airline and travel industry and has a market capitalization of INR 2,082 crores. Despite being a good dividend stock, the company is not undervalued with a P/E ratio of 27.33, making it the most expensive on the list. 

In FY22, the net income jumped by 80.51% on a YoY basis to INR 76.21 crores which helped the company to increase its dividend payout by 19.2% to INR 62 per share. Surprisingly, the payout ratio was 1.21 as the earnings per share (EPS) was INR 51.06 (less than DPS). The current dividend yield of the stock is 4.44%.