Best Dividend Stocks in Nepal : 2022

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There is a strong correlation between the price of stocks on the Nepal Stock Market and the anticipation of dividends the company proposes. It is always appreciated by investors if a company has good growth prospects and has provided good dividends to its shareholders in the past. 

Make your investment decisions based on what stocks have provided the highest dividends in recent years using this article!

Do you know the only thing that gives me pleasure? It's to see my dividends coming in.
— John D. Rockefeller

Dividends are issued to clients when the company they invested in declare that dividend will be paid to its shareholders over a period either yearly or half-yearly depending on the discretion of the company. 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 and with the power of compounding it's return over long period will be incredible, 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. 

RELATED: STOCK MARKET EXPLAINED : BEGINNERS SERIES

When Are Dividends Announced and Paid in Nepal?

Upon completion of a financial year (financial year), companies prepare audit reports. 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. Bhadra or August-September. 

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 and Cash dividends come to the bank account.

Top 10 Dividend Stocks (Expected) (FY 2022/23)

Stock	Bonus Dividend (%)	Cash Dividend (%)	Total Dividend (%)
Nepal Telecom	0	60	60
Mahila Micro Finance	40	11	51
Bottler's Nepal Terai Ltd.	0	60	60
Unilever Nepal Limited	0	1628	1628
Forward Micro Finance	35	15	50
Himalaya Distillery Limited	49	11	69
Deprosc Micro Finance	15	25	40
Agriculture Development Bank	0	21	21
Everest Bank Limited	10	31	41
Siddhartha Bank Limited	0	20	20

Nepal Stock Exchange Listed Companies Give Either Stock Dividends or Cash Dividends

What Are Stock Dividends (Bonus Shares)?

Dividends paid in the form of new shares are known as stock dividends or bonus shares. You can receive additional shares if you are already an existing shareholder. When a company reinvests in itself and seeks to grow, bonus shares are given.
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 Nepali Rupees cash in your bank account. 
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How To Calculate Dividends in Nepal ?

Bonus Shares/Stock Dividend

Let's take an example from the table above. Deprosc Microfinance Company (DDBL) will be paying 30% stock dividend. So, if you have bought or have 100 shares of DDBL, you will get 30 additional shares as bonus dividend after tax.

Cash Dividend

Suppose Nepal Telecom has proposed 60% cash dividend. So, if you have 100 shares of NTC, you will receive 60% of its value i.e. Rs 6,000. Capital gains tax is deducted at source from this dividend.

Top 10 Dividend Stocks (FY 2021/22)

Stock	Stock Dividend (%)	Cash Dividend (%)	Total Dividend (%)
Unilever Nepal	0	650	650
Nepal Lube Oil	30	5	35
Nepal Telecom	20	20	40
Forwad Micro Finance	35	7	42
Deprosc Microfinance	20	1.053	21.053
Agriculture Development Bank	20	1.05	21.05
Jeevan Bikas MicroFinance	70	3.68	73.68
Mahila MicroFinance	47.5	2.5	50
National MicroFinance	40	5	45
Sanima Bank Ltd.	17	0.89	17.89

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.

Got any questions?
Do let us know below on the comment section.

This article is accurate and the reports are taken from Systemxlite, Nepsealpha and Sharesansar.com. Content is for educational purposes only and does not serve as recommendation.

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