Penny stocks are low-priced shares, typically trading under ₹100, and often attract small and retail investors due to their affordability. While many penny stocks are speculative and volatile, some offer high dividend yields, providing investors with an opportunity to earn regular income alongside potential capital appreciation.
In 2025, a handful of Indian penny stocks are emerging as dividend champions, combining low share prices with consistent cash payouts. These stocks can play a key role in building a steady passive income stream for those willing to take calculated risks.
This article highlights the top high-dividend penny stocks under ₹100, their yields, financial health, risk factors, and strategies to invest wisely.
Why Focus on Dividend-Paying Penny Stocks?
1. Dual Benefit of Income and Growth
Dividend-paying penny stocks provide two potential benefits:
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Regular income through dividends
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Capital appreciation if the stock price rises
For small investors, this dual benefit can accelerate portfolio growth with limited capital.
2. Downside Cushion
Even if the share price stagnates, dividend payouts act as a cushion, reducing the overall risk of holding low-priced shares.
3. Affordable Entry for New Investors
High-quality large-cap dividend stocks are often expensive. Penny dividend stocks allow new investors to participate in the market with limited capital while still earning returns.
Top High-Dividend Penny Stocks Under ₹100 in 2025
Below are three prominent penny stocks that are offering attractive dividends in 2025:
1. NHPC Ltd.
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Price Range: ₹83–84
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Dividend Yield: ~2.3%
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Payout Frequency: Semi-annual
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Sector: Renewable & Hydro Power
NHPC is a government-owned enterprise engaged in hydropower and renewable energy projects. The company has a long history of regular dividend payments, supported by stable cash flows from its power generation business.
Why It’s Attractive:
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Government backing ensures steady revenue.
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Semi-annual dividend payouts support long-term income.
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Focus on solar and green energy expansion positions the company for future growth.
Key Consideration:
While the yield is modest compared to other penny stocks, NHPC offers stability and lower risk, making it a relatively safer option for conservative investors.
2. Taparia Tools Ltd.
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Price Range: ₹28
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Dividend Yield: ~178–180%
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Payout Frequency: Twice a year
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Sector: Tools & Manufacturing
Taparia Tools is a small-cap manufacturer of hand tools with a history of exceptionally high dividend payouts. In the last 12 months, the company declared dividends totaling ₹50 per share, which is almost twice its share price.
Why It’s Attractive:
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Unmatched dividend yield in the penny stock space.
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Consistent history of distributing profits as dividends.
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Strong niche presence in the domestic tool market.
Key Consideration:
Despite the high yield, low market capitalization and thin trading volumes make it illiquid and more volatile. Investors should limit exposure and avoid large-volume trades.
3. Trident Ltd.
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Price Range: ₹28–29
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Dividend Yield: ~1.7%
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Payout Frequency: Annual with interim payouts
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Sector: Textiles & Paper Manufacturing
Trident Limited is a well-known textile and paper company with an increasing global footprint. Despite being a penny stock by price, Trident has strong financial fundamentals and a consistent dividend history.
Why It’s Attractive:
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Diversified revenue from textiles, yarn, and paper.
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Improving profitability and steady dividend growth.
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Backed by exports and brand expansion.
Key Consideration:
The yield is lower than Taparia Tools, but Trident provides better liquidity and less price volatility.
How to Select High-Dividend Penny Stocks
Investing in penny stocks can be both rewarding and risky. While their low price attracts retail investors, not every penny stock is financially sound or consistent in dividend payouts. Therefore, identifying high-dividend penny stocks requires thorough research and careful screening.
Here are five essential criteria to help you choose safe, dividend-paying penny stocks in 2025:
1. Check Dividend History
Why It Matters:
A consistent dividend history is a clear signal that the company is profitable and shareholder-friendly. Companies that regularly distribute dividends usually have stable earnings and less speculative risk.
What to Look For:
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Look for companies that have paid dividends for at least 3–5 years.
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Ensure that dividends are not erratic or one-time windfalls.
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Verify frequency: quarterly, semi-annual, or annual payouts.
Example Analysis:
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NHPC: Paid dividends every year for over a decade, making it a reliable PSU choice.
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SJVN: Consistent annual and interim dividends, with yields often above 5%.
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Taparia Tools: Known for extraordinary dividend payouts, although the stock is illiquid.
Investor Tip:
Consistent dividend history indicates financial discipline. Avoid companies that suddenly announce a very high dividend without a track record, as it may be unsustainable.
2. Analyze Dividend Payout Ratio
Why It Matters:
The dividend payout ratio (DPR) shows how much of the company’s profit is distributed as dividends. A very high payout ratio might look attractive but could indicate risk if earnings fall in the future.
Ideal Range:
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Below 70–80% is considered sustainable for most companies.
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Above 100% means the company is paying more than it earns, which is unsustainable in the long term.
Example Payout Ratios:
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Taparia Tools: ~55% → Sustainable, leaves room for reinvestment.
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NHPC: ~60–75% → Safe, backed by stable PSU cash flows.
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Trident: ~48% → Conservative, balances dividends and growth.
Investor Tip:
Always cross-check the payout ratio with profit growth trends. A high payout is safe only if earnings are stable.
3. Evaluate Financial Health
Why It Matters:
Dividends can only be sustained if the company has strong financials. Weak balance sheets often lead to dividend cuts during economic slowdowns.
Key Financial Parameters:
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Profit Growth
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Consistent year-on-year growth ensures the company has enough surplus to distribute dividends.
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Example: Trident’s textile exports generate stable earnings, supporting its annual dividends.
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Debt Levels
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High debt increases interest costs, reducing available profits for dividends.
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Prefer low or moderate debt companies like NHPC and SJVN, which are largely PSU-backed and financially stable.
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Cash Flow
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Positive and stable operating cash flow is crucial for dividend payouts.
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Even profitable companies can struggle to pay dividends if cash flow is weak.
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Investor Tip:
Focus on companies with stable revenue, low debt, and positive cash flow for long-term dividend safety.
4. Check Liquidity
Why It Matters:
Many penny stocks trade in low volumes, which can lead to liquidity risk. Illiquid stocks are hard to exit quickly, and their prices can be easily manipulated by market operators.
Liquidity Check:
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Review average daily trading volume on NSE/BSE.
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Avoid stocks with extremely low volumes, even if the dividend yield is very high.
Example:
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Taparia Tools offers extraordinary dividends, but its illiquidity can trap investors if they need to sell quickly.
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NHPC, SJVN, and Trident are highly liquid, suitable for safer dividend investing.
Investor Tip:
Allocate smaller amounts to illiquid, high-yield stocks and larger portions to liquid PSUs for a balanced approach.
5. Diversify Across Sectors
Why It Matters:
Penny stocks are inherently riskier than blue chips, and concentrating on a single stock or sector can amplify risks. Diversification spreads risk and stabilizes dividend income.
Diversification Strategy:
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Combine stable PSU dividend payers with private sector growth stories.
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Include different sectors like power, manufacturing, textiles, and mining to balance cyclical risks.
Example Allocation:
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PSUs: NHPC, SJVN → Stable and predictable dividends.
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Private Companies: Trident, Taparia Tools → Growth with higher yield potential.
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Commodity Player: Hindustan Zinc (fractional) → High quarterly dividends but cyclical risk.
Investor Tip:
Aim for a blend of 4–6 dividend penny stocks across 2–3 sectors to maximize income and minimize sector-specific shocks.
Sample Penny Dividend Portfolio (₹20,000 Investment)
| Stock | Price (₹) | Units | Investment (₹) | Annual Dividend (₹) | Approx Yield |
|---|---|---|---|---|---|
| NHPC | 84 | 100 | 8,400 | 190 | 2.3% |
| Taparia Tools | 28 | 100 | 2,800 | 5,000 | 178% |
| Trident | 29 | 100 | 2,900 | 50 | 1.7% |
| SJVN | 86 | 50 | 4,300 | 224 | 5.2% |
| Hindustan Zinc* | 95 | 40 | 3,800 | 830 | 21.8% |
Total Investment: ₹22,200
Estimated Annual Dividend: ₹6,294 (~28% blended yield)
Note: Hindustan Zinc yield is calculated on the actual dividend per share scaled to investment size.
Risks of Dividend Penny Stocks
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Dividend Cuts: Companies may reduce or skip payouts if profits fall.
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High Volatility: Penny stocks can fluctuate sharply with market news.
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Liquidity Risk: Illiquid counters like Taparia Tools are hard to exit quickly.
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Overdependence on a Single Stock: Relying solely on high-yield stocks is risky; diversification is key.
Expert Investment Tips
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Track Ex-Dividend Dates to secure payouts.
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Reinvest Dividends to compound wealth over time.
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Limit Exposure to illiquid stocks to 10–15% of the portfolio.
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Monitor Financial Results for early signs of dividend risk.
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Blend PSUs with Private Players for stability and growth.
Key Takeaways for Stock Selection
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Consistency over Hype: A moderate, consistent dividend is safer than a one-time high payout.
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Financial Health First: Cash flow and low debt matter more than headline yields.
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Liquidity Matters: High dividend stocks are useless if you cannot sell them when needed.
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Diversify to Reduce Risk: Mix PSUs with private players to balance income and growth potential.
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Monitor Annually: Dividend policies can change, so review performance at least once a year.
Conclusion
Dividend-paying penny stocks can transform small investments into steady income streams if chosen wisely. In 2025:
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Taparia Tools dominates with unmatched yield but high liquidity risk.
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NHPC and SJVN provide stable PSU-backed dividends.
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Trident offers moderate income with strong growth potential.
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Hindustan Zinc (fractional exposure) brings exceptional quarterly dividends for income seekers.
A diversified, well-researched penny dividend portfolio can offer the dual benefits of income and growth, helping investors maximize returns with limited capital.
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