When it comes to investing, dividend yield is a crucial metric for income-focused investors. It not only reflects a company’s ability to generate profits but also rewards shareholders through regular cash flows. Smallcap stocks, although riskier than their largecap counterparts, can offer attractive dividend yields that make them a lucrative option for investors seeking passive income.

Below is a detailed analysis of the top 10 smallcap companies in India offering the highest dividend yields based on their past 12-month payouts and current market prices.

1. Aster DM Healthcare – Dividend Yield: 26%

• Market Price: ₹476

• Market Cap: ₹23,767 crore

• Dividend Paid (Last 12 Months): ₹124

Aster DM Healthcare tops this list with an impressive dividend yield of 26%. This means investors receive ₹124 per share on a stock priced at ₹476. This high payout ratio may be influenced by special dividends, signaling a one-time distribution event or strong financial performance.

2. MSTC Ltd. – Dividend Yield: 10%

• Market Price: ₹479

• Market Cap: ₹3,369 crore

• Dividend Paid: ₹45.5

MSTC Ltd. follows closely with a 10% dividend yield, showcasing consistent performance and commitment to rewarding its shareholders. The company, known for its role in metal trading and e-commerce, has been increasingly attracting dividend-hunting investors.

3. Chennai Petroleum Corporation – Dividend Yield: 9%

• Market Price: ₹595

• Market Cap: ₹8,853 crore

• Dividend Paid: ₹55

Chennai Petroleum, engaged in refining and downstream petroleum operations, offers a stable dividend yield of 9%. The company's strong cash flow from operations and profitability from refined products contribute to these consistent payouts.

4. DB Corp Ltd. – Dividend Yield: 9%

• Market Price: ₹222

• Market Cap: ₹3,960 crore

• Dividend Paid: ₹20

DB Corp, a leading print media company in India, has a healthy 9% dividend yield. The company's consistent advertising revenue and legacy readership base contribute to steady financials, making it an attractive income stock.

5. Allcargo Logistics Ltd. – Dividend Yield: 8%

• Market Price: ₹28

• Market Cap: ₹2,705 crore

• Dividend Paid: ₹2.1

Despite its low share price, Allcargo Logistics delivers a solid 8% dividend yield. This logistics firm is known for multimodal transport solutions, and the steady cash flow from global operations supports its dividend-paying capacity.

6. Castrol India Ltd. – Dividend Yield: 7%

• Market Price: ₹199

• Market Cap: ₹19,641 crore

• Dividend Paid: ₹13

Castrol India, a leader in the automotive lubricants segment, boasts a 7% yield, driven by a consistent business model, strong brand recall, and high operating margins.

7. Indian Metals and Ferro Alloys Ltd. – Dividend Yield: 6%

• Market Price: ₹593

• Market Cap: ₹3,198 crore

• Dividend Paid: ₹37.5

Indian Metals and Ferro Alloys (IMFA) has rewarded its shareholders with a 6% dividend yield, thanks to its core business in ferro alloys which has seen steady demand across global markets.

8. Gujarat Pipavav Port Ltd. – Dividend Yield: 6%

• Market Price: ₹134

• Market Cap: ₹6,457 crore

• Dividend Paid: ₹7.7

This port operator plays a vital role in India’s maritime logistics. Offering a 6% dividend yield, Gujarat Pipavav has benefitted from increasing trade and port activity, ensuring predictable cash flow and shareholder rewards.

9. VST Industries Ltd. – Dividend Yield: 6%

• Market Price: ₹264

• Market Cap: ₹4,488 crore

• Dividend Paid: ₹15

VST Industries, known for its tobacco business, has consistently shared profits through dividends. Its 6% yield makes it a top choice for conservative investors seeking stable returns from consumer staples.

10. RITES Ltd. – Dividend Yield: 5%

• Market Price: ₹213

• Market Cap: ₹10,252 crore

• Dividend Paid: ₹11.2

RITES Ltd., a government-backed engineering consultancy firm, provides a 5% dividend yield, backed by public sector contracts and regular dividend payouts, reflecting its solid business model and profitability.

Why Dividend Yield Matters in Smallcap Investing

Dividend yield is a financial ratio that shows how much a company pays out in dividends each year relative to its share price. For investors, especially retail and income-seeking investors, this ratio is crucial in:

• Evaluating passive income potential

• Measuring return on investment beyond capital gains

• Identifying companies with solid cash flows and governance

In smallcaps, high dividend yield stocks stand out as reliable investment options because they combine growth potential with regular income.

Key Considerations Before Investing in High Dividend Smallcap Stocks

While dividend yield is attractive, investors must assess sustainability and not get swayed by past payouts alone. A few critical checks include:

• Earnings consistency: Is the company consistently profitable?

• Debt levels: High debt can strain future payouts.

• Dividend payout ratio: This indicates whether the company is paying more than it earns.

Always cross-reference dividend yield with financial health, market position, and future growth prospects.

Conclusion: Smallcaps That Reward Consistently

These top 10 smallcap stocks with highest dividend yields reflect a blend of strong business fundamentals, cash flow generation, and management commitment to shareholder returns. While smallcap investing carries inherent risks, focusing on companies with steady dividend payouts can help create a well-balanced, income-oriented portfolio.

Investors looking for long-term passive income and capital appreciation should consider these stocks as part of a diversified strategy.

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