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Top 10 Dividend-Paying Stocks in Nepal

Roberto worked as a research analyst for a stock brokerage company and has been writing about the Nepali stock market since 2013.

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The prices of stocks in the Nepal Stock Market are highly dependent on the anticipation of dividends the company propose. If a company has good growth prospects and has a history of providing back good dividends to its shareholders, it is always appreciated by the investors. Use this article to see which stocks have been providing the highest dividends in recent years and make your investment decision accordingly!

The stock market is designed to transfer money from the active to the patient.

— Warren Buffett

When Mr. Buffett said the above quote, he meant it. But what happens when you become patient and leave your stock investments aside? The answer is you make them grow naturally and without any interference. Whether by price action or by dividends, the value of those investments in the stocks grow. But not all stocks pay good dividends. Some stocks don't pay dividends at all. Here are some Nepali companies that have consistently given the highest dividends in the stock market.

RELATED: If You Had Invested Rs 1 Lakh in the Nepali Share Market for 5 Years, This Is What You Would Have Made

When Are Dividends Announced and Paid in Nepal?

After a financial year (fiscal year) is complete, companies prepare an audit report for the completed year. Once the audit is complete, the Board of Directors (BOD) are responsible for declaration of dividends, if any. This announcement generally starts from the end of the first month of the new fiscal year i.e. Shrawan or July-August (read on to know more about Nepali fiscal years below). However, mutual funds generally announce dividends earlier.

Dividends are paid after the company conducts its yearly shareholders' meeting, also known as Annual General Meeting (AGM). Once the AGM endorses the dividends, they are paid out. Cash dividends often arrive sooner in the respective bank accounts of the shareholders whereas bonus shares take a few months to arrive. The schedule of AGM is supposed to be published on a national daily newspaper at least 15 days before the meeting day.

The bank account is the one the shareholder gave when opening the "Demat" account. Bonus shares come directly to the said demat account.

Top 10 Dividend Stocks (FY 2021/22)

Dividends Proposed by Companies for Nepali Fiscal Year 2078/79

StockStock Dividend (%)Cash Dividend (%)Total Dividend (%)

Bottlers Nepal Terai Limited

0

60

60

Nepal Lube Oil

25

5

30

Sanima Equity Fund

0

22

22

NMB 50 (Mutual Fund)

0

21.05

21.05

NMB Hybrid Fund L-1

0

21.05

21.05

Kumari Bank Limited

0

12.5

12.5

Sunrise First Mutual Fund

0

12

12

Ruru Jalbidyut Pariyojana Limited

10

0.5

10.5

Arun Kabeli Power Limited

10

0

10

Siddhartha Investment Growth Scheme-2

0

10

10

Nepali Companies Give Either Stock Dividends or Cash Dividends

What Are Stock Dividends (Bonus Shares)?

Stock Dividends, also called Bonus Shares, are dividends paid in the form of new shares. If you are an existing shareholder of the company, you are entitled for additional shares. Bonus shares are given when the company re-invests in itself and is looking for more growth. In case of Banks and Insurance companies, bonus shares are issued also when they have to meet a certain regulatory requirement. For example: reaching a certain paid-up capital requirement, maintaining a certain Capital Adequacy Ratio against risky assets etc.

How Are Bonus Shares Given?

Bonus shares are announced as percentage of paid-up capital. If a company announces 10% bonus shares, it means that it will issue 1 new share for every 10 paid-up shares of the company. So, if you have 100 shares of the company on its book closure day, the company will pay you 10 shares. Yes, for free! (minus capital gains tax).

Nepali Fiscal Year & Gregorian Calendar Years

The official calendar of Nepal is the Bikram Sambat (BS) calendar. A full Nepali financial year runs through the fourth month (called Shrawan) of the BS calendar and ends in the last day of third month (called Asadh) next year. When compared to Gregorian calendar, a fiscal year starts in the middle of July of a certain year to the middle of July of the next year. Generally, it starts from July 16th and ends on July 15th the next year but this is not always the case.

Since a fiscal year touches two different years, it is written as FY 2021/22. The corresponding Nepali fiscal year is FY 2078/79. (BS years are 57 years ahead of the Gregorian calendar years)

Below, you will find a list of the latest Nepali Fiscal Years with corresponding Gregorian years.

  • FY 2079/80 - FY 2022/23 (currently running)
  • FY 2078/79 - FY 2021/22 (July 16, 2021 - July 16, 2022)
  • FY 2077/78 - FY 2020/21 (July 16, 2020 - July 15, 2021)
  • FY 2076/77 - FY 2019/20 (July 17, 2020 - July 15, 2020)
When cash dividends are paid out, you'll receive real Nepali Rupees cash in your bank account.

When cash dividends are paid out, you'll receive real Nepali Rupees cash in your bank account.

How To Calculate Dividends in Nepal

Bonus Shares/Stock Dividend

Let's take an example from the table above. Womi Microfinance Company will be paying 30% stock dividend and no cash. So, if you have 100 shares of Womi, you are entitled to 30 additional shares free of cost.

Cash Dividend

Unilever Nepal has proposed 100% cash dividend. So, if you have 100 shares of UNL, you will receive 100% of its value i.e. Rs 10,000. Capital gains tax is deducted at source from this dividend.

Top 10 Dividend Stocks (FY 2020/21)

Dividends Proposed by Companies for Nepali Fiscal Year 2077/78

StockStock Dividend (%)Cash Dividend (%)Total Dividend (%)

Unilever Nepal

0

650

650

Nepal Lube Oil

30

5

35

Sadhana Microfinance

25

1.32

26.32

Swarojgar Microfinance

25

0

25

Deprosc Microfinance

20

1.053

21.053

Ngadi Group Power Limited

20

1.05

21.05

Mirmire Microfinance

20

0

20

Ruru Jalbidyut Pariyojana Limited

10

10

20

Arun Kabeli Power Limited

17

0.89

17.89

Api Power Company

10.5

0.55

11.05

Top 10 Dividend Paying Stocks (FY 2019/20)

Source: Nepal Stock Exchange (2019–2021)

StockStock Dividend (%)Cash Dividend (%)Total Dividend (%)

Unilever Nepal

0

100

100

Himalayan Distillery

50

50

100

Janautthan Samudayik Microfinance

49.40

2.60

52

Nepal Telecon

0

40

40

Radhi Hydropower Company

36.50

0

36.50

Nabil Bank

33.50

1.76

35.26

Forward Community Microfinance

25

6.58

31.58

Womi Microfinance

30

0

30

Shikhar Insurance Company

27.769

1.462

29.231

What Are Cash Dividends?

Cash Dividend is the simplest form of dividend payment. It's in the form of cash and is directly deposited to your bank account. They are also calculated on the same basis. If a company declares 10% cash dividend and you have 100 shares, you are entitled to get 10% of the value of those 100 shares.

Keep in mind that the value of those shares are paid-up value or par value. This is not the value of those shares as per the per share market price. Since the majority of shares in Nepal Stock Market have par value of Rs 100 per share, this is the dividend calculation:

  • Value of the shares: 100 shares x Rs 100 = Rs 10,000
  • Dividend = 10% of Rs 10,000 = Rs 1,000

Hence, the company will pay you Rs 1,000 (minus dividends tax)

Rs 100 is generally the IPO price of any company in Nepal stock market. For mutual funds and Soaltee Hotel (SHL), the par value is Rs 10 per share.

Top 10 Dividend-Paying Stocks (FY 2018/19)

Source: Nepal Stock Exchange (2018–2020)

StockStock Dividend (%)Cash Dividend (%)Total Dividend (%)

Unilever Nepal

0

770

770

Himalayan Distillery

50

52.63

102.63

National Microfinance Company

75

5

80

Mirmire Microfinance Company

45

2.36

47.36

Suryodaya Microfinance Company

44.47

2.34

46.81

Forward Microfinance Company

32.5

12.5

45

Deprosc Microfinance Company

30

15

45

Nepal Telecom

0

45

45

Chhimek Microfinance Company

27.11

17.21

44.32

This article is accurate and true to the best of the author’s knowledge. Content is for informational or entertainment purposes only and does not substitute for personal counsel or professional advice in business, financial, legal, or technical matters.

© 2020 Roberto Eldrum