Best dividend stocks on PSX: the highest-yielding shares, updated daily

Plenty of Pakistani companies hand a large share of their profit back to shareholders as cash. Measured against the share price, some of those payouts beat what a savings account or a National Savings certificate pays. This list ranks PSX shares by dividend yield, the dividend you would have received over the past year for every rupee you put in at today's price.

The table refreshes itself: prices update through the trading day and the ratios once a day, as new filings come in.

The highest dividend yields on PSX today

What dividend yield means

Dividend yield is the cash a company paid per share over the last year, divided by today's share price.

A company that paid Rs 10 in dividends over the year, with shares at Rs 100, has a yield of 10%. Buy Rs 100,000 of those shares and, if the company pays the same again, you would receive about Rs 10,000 before tax over the next year.

Two things move the number:

• The dividend. A bigger payout raises the yield; a cut lowers it.
• The price. If the share price falls and the dividend stays the same, the yield goes up. That is why the next section matters.

When a high yield is a warning

A yield is calculated from dividends already paid. It tells you nothing certain about the next one. Be careful when:

• The price has just fallen hard. A 20% yield often means the market expects the dividend to be cut. Check the stock page for recent results and announcements.
• The dividend was a one-off. A company that sold a business or had a windfall year may pay a special dividend it will not repeat.
• The company is paying out more than it earns. If dividends per share are higher than earnings per share for more than a year, the payout is being funded from savings or debt.
• It is a small, thinly traded company. This list leaves out companies worth less than Rs 2 billion for that reason, but liquidity still varies a lot among those that remain.

Four checks before buying for income

1. History. Has the company paid a dividend every year for the last five? Steady payers are rarer than high yields.
2. Cover. Are earnings per share comfortably above dividends per share? Twice the dividend is a healthy margin.
3. Cash. Is the company generating real cash from its business, not just accounting profit?
4. Debt. A company borrowing heavily to keep paying dividends can't keep it up for long.

Each company's page on Nafa shows its income statement, cash flow and dividend announcements, so you can run these checks in a few minutes.

How dividends reach you

When a PSX company pays a cash dividend, it goes straight into the bank account (IBAN) registered against your CDC account. You don't have to apply for it. You need to hold the shares before the book closure date in the company's announcement; buy after that and the dividend goes to the previous owner.

On the day a share stops carrying its dividend, the price usually drops by about the dividend amount. Buying just before a dividend is paid doesn't give you free money.

Tax on dividends

Tax is deducted before the dividend reaches you. For most companies the rate is 15% if you are on FBR's Active Taxpayers List and 30% if you are not, so filing your return halves the tax on your dividends. Some companies, such as power producers, have different rates. Check FBR's current rates before relying on these figures.

Related guides

• Best value stocks on PSX: the lowest price-to-earnings ratios, updated daily.
• Best growth stocks on PSX: the companies growing their profits fastest.
• Banking stocks on PSX: banks are among the most generous dividend payers on the exchange.