Top 5 NSE 500 index high dividend yield stocks: Buy or sell strategy here

IDFC, Vedanta and oil marketing stocks among top dividend yield NSE 500 companies; Technical charts suggest up to 14% upside for these stocks; track these key levels.

IDFC with a dividend yield of nearly 11 per cent tops the dividend yield list of the NSE 500 companies, shows the latest ACE Equity data.

It is followed by BPCL (9 per cent), HPCL (8 per cent), Indian Oil Corporation (7 per cent) and Vedanta (6.6 per cent). 

That apart, Chennai Petroleum, Coal India, UTI Asset Management Company, ONGC, Ujjivan Small Finance Bank, ICICI Securities, Power Grid Corporation, NMDC, Gujarat Pipavav and HCL Technologies dividend yield stands in the range of 3 - 5.6 per cent.

What is dividend yield, and its significance?

Dividend yield is a financial ratio that tells you about the per centage of a company's share price paid out in dividends annually. In a way, it is an amount you as an investor earn as dividend-only on your investment in the particular stock.

 

The dividend yield is calculated by simply dividing the annual dividend per share by the current market price. For e.g. if the annual dividend is Rs 10 per share and the stock price is Rs 200; the dividend yield will be 5 per cent.

Dividend yield is a useful metric in determining if the stock trades at a good valuation or not. In general, when a company declares a stock dividend, it signals its optimistic outlook and belief in future prosperity.

Should you buy these dividend yield stocks at present levels or what should your trading strategy be? 

Here's how the top 5 dividend yield stocks are placed on the technical charts - Watch out for these key levels:

IDFC

Current Price: Rs 110

Upside Potential: 5.5%

Support: Rs 109; Rs 105

Resistance: Rs 113; Rs 115

IDFC stock is seen attempting to snap its lower-highs, lower-lows pattern on the daily scale. The stock will need to rise above Rs 111.70 to do so. Further, on the weekly scale, the stock seems to have found support around its 100-WMA (Weekly Moving Average), which stands at Rs 105. 

The stock at present is seen trading with a negative bias; as it quotes below the key moving averages. While it attempts a pullback IDFC stock may head into Rs 113 hurdle; above which resistance for the stock is expected around Rs 115 and Rs 116 levels. CLICK HERE FOR THE CHART

That apart, the monthly chart indicates that the stock needs to hold above Rs 109 on a monthly closing basis for the bias to remain positive.

BPCL

Current Price: Rs 352

Upside Potential: 10.8%

Support: Rs 347; Rs 338

Resistance: Rs 365; Rs 375

The price-to-moving averages action seems favourable for BPCL. The near-term trend is likely to remain upbeat at long as the stock holds above Rs 347. On the upside, the stock seems headed towards Rs 390, with immediate resistance seen at Rs 355. 

On the upside, the stock is expected to counter resistance around Rs 365 and Rs 375 levels. Whereas, below Rs 347, the stock may seek support around its 20-DMA (Daily Moving Average) which hovers around Rs 338. CLICK HERE FOR THE CHART

HPCL

Current Price: Rs 398

Upside Potential: 8%

Support: Rs 391; Rs 377

Resistance: Rs 400; Rs 411; Rs 420

HPCL too is seen trading with a positive bias on the daily scale. The stock at present is seen testing resistance around its higher-end of the Bollinger Bands at Rs 400. Having said that, the near-term bias for the stock is likely to remain upbeat as long as it trades above Rs 391.

On the upside, the stock can potentially rally to Rs 430; with interim resistance likely at Rs 411 and Rs 420 levels. In case of a dip, the stock may seek support around its 20-DMA at Rs 377. CLICK HERE FOR THE CHART

Indian Oil (IOC)

Current Price: Rs 172

Upside Potential: 14%

Support: Rs 164

Resistance: Rs 177; Rs 184

Unlike the other two stocks of state-run oil marketing companies, IOC seems to be trading on a tepid note. The key momentum oscillators on the weekly and monthly chart suggest a mixed bias. As such, the near resistance on the weekly chart at Rs 177 becomes crucial. The stock will need to conquer this in order for the trend to turn favourable.

Post which, the stock may potentially rally to Rs 184 - Rs 196 levels. On the downside, IOC stock has support at Rs 164 levels. CLICK HERE FOR THE CHART

Vedanta

Current Price: Rs 450

Upside Potential: 7.3%

Support: Rs 423

Resistance: Rs 456; Rs 458

Vedanta stock is seen consistently treading along its 20-WMA for the last five weeks, which now stands at Rs 423. On the upside, the stock can surge to Rs 483, with near resistance seen at Rs 456 and Rs 458. CLICK HERE FOR THE CHART