Nifty 50’s ‘Highest’ Dividend-Paying-Stock Breaks ‘Crucial’ Support!
Although, the benchmark index seems to be stabilizing near the lower levels, many individual counters are still witnessing heavy sell off. One such large cap which has breached its critical support and now looking to extend its plunge is Coal India (NS:). It has almost a monopoly in India in the coal mining sector, having a market capitalization of INR 1,28,462 crores.
The stock is more or less moving sideways since August 2022, as it has finally ended its bull run which started from October 2020. After making a top of INR 263.4 in November 2022, the stock has only been following a downward trajectory. In the previous trading session, it tanked below its crucial support of INR 210 and that too on a closing basis.
Image Description: Weekly chart of Coal India
Image Source: Investing.com
Since August last year, this support was never breached despite being tested several times. In technical parlance, the more the number of times a support or resistance level gets tested, the more important it becomes. This essentially means a break above/below this level has a higher probability of propelling the stock in that direction. Because the previous session was Friday, the breakdown was also confirmed on the weekly chart.
As the chart structure is quite bearish, traders can look for short opportunities in this counter. The next support level which can be eyed is around INR 200 which could come in this week alone.
However, these lower levels are also a good opportunity for dividend seekers who are on a hunt for high-dividend-paying stocks. Being a PSU (public sector undertaking) it shells out hefty dividends for the government and the current dividend yield stands at an inflation-beating 8.16%. This makes it the highest dividend-paying company in the frontline Nifty 50 index.
One thing to note here is, being a commodity-based business, it is very important to time investments due to the cyclical nature of such businesses. Currently, coal prices are significantly down from their peak made after the Ukrain-Russia war broke out, which would impact the current earnings potential of Coal India.
Dividends may fluctuate in the future, however, the consistency of paying high dividends is one of the specialties of the management of Coal India. The company has never skipped a year in over a decade when it comes to shelling out dividends to shareholders.
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