Many investors love the idea of earning money without lifting a finger, and dividend stocks make that possible. However, understanding how dividends work, picking the right stocks, and figuring out the tax rules can feel like a headache.
You've probably seen people talk about earning passive income just by holding onto certain stocks, but not all of them actually deliver. And when they do, there's always the question of how much of that income you actually get to keep after taxes.
Dividend stocks are one of the smartest ways to generate a steady cash flow while also building long-term wealth. The right ones can pay you consistently, helping you grow your money without the stress of constant trading. But not all dividend stocks are created equal—some are reliable money-makers, while others look great on paper but fail to perform when it matters.
This blog is here to make things simple. We'll break down the best dividend-paying stocks in India, show you how to use Ticker's Dividend Screener to find them with ease and explain the tax rules so there are no unpleasant surprises.
Table of Contents:
A dividend is a portion of a company's profit that is distributed to its shareholders. When a company earns profits, it can either reinvest them back into the business or share a part of them with investors in the form of dividends.
However, paying dividends is not mandatory. The company's board of directors decides it and requires approval from shareholders. The only exception is preference shareholders, who are entitled to receive dividends as per the company's policy.
For investors, dividends serve as a steady source of passive income, but they are also considered taxable income. While they can be a great way to build long-term wealth, it is important to understand the tax implications before investing in dividend-paying stocks.
Not everyone wants to rely solely on price movements to make money. Some investors prefer a more immediate, steady, reliable return from their investments—this is where dividend stocks come in.
What Are Dividend Stocks?
Some companies don't keep all their profits to themselves—they share a portion with their investors in the form of cash dividends. These are called dividend stocks. Instead of waiting for stock prices to rise, investors earn a regular payout, making these stocks a popular choice for those looking for steady returns.
Most dividend-paying companies are already well-established, meaning they may not grow as aggressively as newer, high-risk stocks. However, they offer stability and a consistent income stream, which can be a game-changer for long-term investors.
Why Are Dividend Stocks Important?
In addition to passive income, dividend stocks offer stability, growth, and risk management, making them a considerable addition to any portfolio. Here's why:
- Regular income: As most firms distribute dividends quarterly, investors get a regular flow of cash, which is a great source of passive income.
- Capital appreciation: Over the long term, these will grow in value, enabling investors to gain capital appreciation as well as dividend income.
- Inflation hedge: When the cost of living increases, so do the dividends of successful companies. This assists investors in keeping purchasing power over time.
- Financial health: Those businesses with a good record of dividend payment are generally in good financial shape and have solid cash flows, hence more trustworthy in uncertain periods.
Historically, companies that consistently pay dividends tend to recover faster during downturns and outperform non-dividend-paying stocks over the long run.
For investors looking to grow their wealth without taking excessive risks, dividend stocks offer an ideal balance of stability and returns.
Stock markets can be unpredictable, but some companies make investing less stressful by rewarding shareholders regularly. Instead of relying solely on price movements, these stocks ensure that investors earn a steady income along the way.
In 2025, a few Indian companies continue to stand out for their strong dividend history and financial stability. Here's a look at the top dividend-paying stocks from the Nifty 500 that can add both consistency and value to an investment portfolio.
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(Source: Finology Ticker)
Knowing which stocks offer good dividends is helpful, but selecting the right ones for your portfolio requires a deeper look. Not all high-dividend stocks are worth investing in, but don't worry; Ticker makes it easy to help you see the difference.
Not every high-dividend stock is a good investment. Some companies flash big numbers but can't sustain them, while others might drain their profits just to keep up appearances. The trick is to find stocks that don't just pay a good dividend today but keep rewarding you consistently while staying financially strong.
However, sorting through hundreds of stocks manually is neither efficient nor practical. Lucky for you, you can just use Ticker's Screener to find the best dividend stocks.
This way, you can quickly filter out weak stocks and find the ones that truly deserve a place in your portfolio—without spending endless hours researching.
By applying a few smart filters, Ticker helps you zero in on stable, high-dividend stocks in just a few clicks. Here's how to do it.
Step 1: Visit Ticker's Stock Screener
Step 2: Click on the "Go to Screener" button, and you will be prompted to log in or sign up to the website. It's free to use, and you can filter stocks based on 1,000+ criteria.
Step 3: Create a screen (criteria to filter out stocks) to help you find the best dividend stocks. You can either create your own, use one of the pre-made screens or just paste this query as it is to find the best dividend stocks:
Yield TTM > 3 AND Dividend Payout Y1 > 50 AND ROE Y1 > 15 AND ROCE Y1 > 15 AND Debt to Equity Y1 < 0.5 AND Net Sales 3yr CAGR < 10
Step 4: Click the "Run Screener" button for results.
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You can just click on the name of the company to find all the financial information that you may need to decide if you want to add it to your portfolio or not.
Ticker also gives you the option to save your screens so you don't have to start from scratch every time. The next time you're looking for dividend stocks, simply load your saved screen, run the Screener, and get updated results instantly.
With real-time data and powerful filtering options, Ticker ensures that finding the best dividend stocks is quick, simple, and reliable. Now, let's look at something just as important—understanding the tax implications of your dividend income.
Don't worry! If you do not know how to use Screener, please read this guide to know that.
Dividends earned from Indian companies are taxable in the hands of investors. Until 31 March 2020, dividends were tax-free because companies paid a Dividend Distribution Tax (DDT) before distributing profits.
However, with the Finance Act 2020, DDT was removed, and now dividend income is taxed as per an investor's applicable income tax slab. And if the total dividend received by an investor exceeds ₹5,000 (in Budget 2025, the TDS threshold was increased to ₹10,000) in a financial year, companies distributing dividends must deduct Tax Deducted at Source (TDS) at 10%.
So, if an investor receives ₹12,000 as a dividend, ₹1,200 (10%) will be deducted as TDS, and they will receive ₹10,800 in their bank account. However, this doesn't mean the tax obligation is settled.
Since dividends are now part of total taxable income, the final tax depends on the investor's income tax slab. If an investor falls into a higher tax bracket, they might have to pay additional tax beyond the TDS already deducted. This means someone in the 30% tax slab would still owe tax on their dividend income after adjusting for the 10% TDS deducted by the company.
Here's an example to help you understand better:
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* The company bears the tax burden; the tax is not deducted but is paid by the company.
For investors who earn significant dividend income, this shift in taxation makes tax planning essential. While dividend stocks offer passive income, it's important to consider the after-tax returns before making investment decisions. Investors should also check if they need to claim a refund or pay extra tax when filing their Income Tax Returns (ITR).
Some investors like steady cash flow, while others wait patiently for big returns. It all boils down to what you want from your investments. Dividend stocks are like reliable earners, handing out a share of their profits regularly, while growth stocks reinvest everything to expand, aiming for higher long-term gains in the form of capital appreciation.
If you're someone who enjoys consistent income and a little less drama in the stock market, dividend stocks might be your thing. They belong to well-established companies that keep making and sharing their profits with their investors.
On the other hand, if you don't mind some market ups and downs and want to see your money grow, then growth stocks could be a better choice.
Dividend stocks vs Growth stocks
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Now, if you still can't decide which one is right for you, then why not choose both? A balanced mix of dividend and growth stocks can give you stable income while letting your money grow over time. With the right mix, you get the best of both worlds—cash flow now and wealth creation for the future.
Want to know whether High-yield dividend stocks are good or not? Click on the link to know in detail.
Conclusion
Investing doesn't have to be complicated, but too many people either overanalyse every stock or blindly follow trends. Dividend stocks offer regular cash flow and lower risk, but without the right approach, they can be misleading. Growth stocks promise higher returns but come with their own set of pros and cons that you have to weigh before you decide to invest.
The trick isn't choosing one over the other—it's choosing the right ones. That's where Ticker changes the game. Instead of spending hours digging through financial reports, you can filter stocks in seconds, analyse them like a pro, and pick great stocks for your portfolio. With Ticker, investing becomes smarter, faster, and stress-free.
FAQs
1. Are dividends better than fixed deposits?
Dividend stocks can offer higher returns but come with market risks, unlike fixed deposits, which provide guaranteed returns.
2. Which sectors offer the highest dividends?
FMCG, utilities, energy, and banking sectors are known for stable and consistent dividend payouts, but in the stock market, nothing is guaranteed.
3. Can I reduce my dividend tax liability?
Tax planning strategies like investing through family members in lower tax slabs or using the HUF structure can help minimise taxes.