Dividend paying bank stocks, at the current market level, offer a much attractive yield than those offered by bank deposits. The average interest rates on one-year bank deposit range between 7 per cent and 8 per cent, while the current dividend yield of 16 listed banks range between 8 and 14 per cent.
Syndicate Bank, currently quoted at Rs 8.45, earns a dividend yield of 14.20 per cent. This was backed by a dividend of Rs 1.20 for the year ended March 2001.
City Union Bank is placed second with a dividend yield of 13.55 per cent. The stock closed at Rs 18.45 as on today. The bank has maintained its dividend of Rs 2.50 even for the fiscal ended March 2001.
Indian Overseas Bank and IndusInd Bank currently quoted below its par value earn a dividend yield of 13.51 per cent and 13.07 per cent respectively.
The other two public banks, State Bank of Bikaner and State Bank of Travancore with a face value of Rs 100 earn a dividend yield of 12.5 per cent and 11.5 per cent respectively. They had declared a dividend of Rs 35 and Rs 30 respectively for the fiscal ended March 2001.
Similarly, State Bank of Mysore, the largest dividend payer among the lot, is currently quoted at Rs 220. This has turned its dividend yield to 10.45 per cent.
The high yield has not been restricted only to bank scrips but also spread out to other sectors such as textiles with 21 scrips, 13 information technologies scrips, 11 NBFCs, seven pharmaceutical scrips and seven auto ancillaries companies.
