The 5 Best Dividend Stocks In Bangladesh

The economic situation in Bangladesh is a complex one. It is both a developing country and one with a large population. There has been progress in recent years, particularly in terms of economic growth and poverty reduction, but there remain significant challenges to be overcome in order to improve the livelihoods of its citizens.

GDP growth has been strong in Bangladesh over the past two decades, with an average annual growth rate of 6.4% since 2000. This has been driven largely by the country’s strong manufacturing sector and its success in apparel exports. However, the economy is still largely dependent on agriculture, which accounts for around 20% of the country’s GDP and employs around 45% of the workforce.

In terms of poverty reduction, Bangladesh has made significant progress over the last two decades. The poverty rate has declined from around 45% in 1991 to just under 26% in 2018. This has been largely due to economic growth and the government’s investments in social programs such as microfinance, health care and education.

Despite the progress made, there are still significant challenges facing the economy. There is a large informal sector, accounting for around 40% of the total employment. The informal sector is largely unregulated and has been identified as a major source of inequality and poverty.

In addition, there are a number of structural challenges, such as a lack of access to credit, inadequate infrastructure and a weak legal system. These issues have hindered the country’s ability to attract foreign investment and create jobs.

Finally, the country is vulnerable to natural disasters, such as floods and cyclones, which can cause widespread disruption. In the aftermath of such disasters, the government has struggled to provide adequate relief and support to affected communities.

Overall, the economic situation in Bangladesh is complex and there are still significant challenges to be overcome in order to improve the livelihoods of its citizens. However, there have been some positive developments in recent years and the country is making progress towards achieving sustainable economic growth.

The 5 best dividend stocks in Bangladesh

1. LankaBangla Finance Limited: LankaBangla Finance Limited is a prominent publicly-traded finance company in the Dhaka Stock Exchange, offering a wide array of financial services. The company has a market capitalization of over BDT 2,000 crore and has been consistently paying dividends to its shareholders since 2011. The company offers a dividend yield of 5.25%, making it one of the top dividend stocks in Bangladesh.

2. Summit Power Limited: Summit Power Limited is one of the most reliable power generation and distribution companies in Bangladesh. The company has a market capitalization of over BDT 13,000 crore and has been consistently paying dividends to its shareholders since 2016. The company offers a dividend yield of 4.62%, making it one of the top dividend stocks in Bangladesh.

3. BRAC Bank Limited: BRAC Bank Limited is a leading banking and financial services company in Bangladesh. The company has a market capitalization of over BDT 17,000 crore and has been consistently paying dividends to its shareholders since 2010. The company offers a dividend yield of 4.57%, making it one of the top dividend stocks in Bangladesh.

4. Grameenphone Limited: Grameenphone Limited is the largest mobile telecommunications operator in Bangladesh. The company has a market capitalization of over BDT 53,000 crore and has been consistently paying dividends to its shareholders since 2006. The company offers a dividend yield of 4.37%, making it one of the top dividend stocks in Bangladesh.

5. Square Pharmaceuticals Limited: Square Pharmaceuticals Limited is one of the leading pharmaceutical companies in Bangladesh. The company has a market capitalization of over BDT 68,000 crore and has been consistently paying dividends to its shareholders since 2006. The company offers a dividend yield of 4.15%, making it one of the top dividend stocks in Bangladesh.

Pros and cons of buying dividend stocks in Bangladesh

Pros:

1. Dividend income: Buying dividend stocks in Bangladesh can be a great way to generate an additional income stream. Dividend payments are usually paid out quarterly or semi-annually and can provide a steady source of income.

2. Capital gains: Over time, dividend stocks can offer long-term capital gains potential. As long as the company is performing well, the stock price can appreciate, creating a larger return on your initial investment.

3. Low cost: Stock markets in Bangladesh are relatively low cost compared to other markets around the world. This can make it a great place to start investing if you’re on a tight budget.

Cons:

1. Volatility: Buying stocks in Bangladesh can be more volatile than stocks in other markets. This can be a risky proposition for those who don’t have much experience in the stock market.

2. Limited selection: The selection of dividend stocks in Bangladesh is more limited than in other markets. This can make it more difficult to find stocks that meet your investment criteria.

3. Currency risk: When investing in Bangladesh, you are exposed to currency risk. This means that any returns you earn can be reduced if the Bangladeshi taka depreciates against your local currency.

What is the average dividend yield historically in Bangladesh?

The average dividend yield historically in Bangladesh has been relatively low, hovering around 3.5%. This is mainly due to the fact that dividend payments are generally not mandatory and most companies tend to prefer to reinvest earnings, rather than pay out dividends. Additionally, the Bangladesh Securities and Exchange Commission (BSEC) has regulations in place that limit the amount of dividends that can be paid out by companies. These factors have resulted in a low average dividend yield rate for Bangladesh.

However, the trend has started to shift in recent years. The government of Bangladesh has taken measures to encourage companies to pay out higher dividends, including the introduction of incentives for companies paying out more than 10% of their earnings as dividends. This has contributed to a slight increase in the average dividend yield in Bangladesh, rising from 3.5% in 2017 to 4% in 2019.

Overall, the average dividend yield in Bangladesh is still relatively low compared to other countries. This is largely due to the fact that the country is still in the early stages of development, and companies tend to reinvest their earnings rather than pay out dividends. Nevertheless, the government is taking steps to encourage higher dividend payments, which may result in a higher average yield in the future.

The historical return of Bangladesh stocks vs Bangladesh dividend stocks

The historical return of Bangladesh stocks is the total return generated by stocks traded on the Bangladesh Stock Exchange (DSE). This return consists of both stock price appreciation and dividends received by shareholders. The DSE is one of the oldest and largest stock exchanges in the world and has been operating since 1954. It provides a platform for investors to buy and sell shares of companies listed on the exchange.

Bangladesh dividend stocks are stocks that pay out dividends, or a portion of the company’s profits, to shareholders. The amount of dividend income paid to shareholders is determined by the company’s board of directors, and depends on the company’s financial situation. Dividend stocks are attractive to investors because they provide a regular income stream and have the potential to increase in value over time.

The historical return of Bangladesh stocks has been volatile, with the main index, the DSE All Share Price Index (DSEX), fluctuating significantly over the years. The DSEX has seen several highs and lows since its inception, peaking in late 2007 and bottoming out in early 2009. In general, the index has trended upwards since 2009, with a few brief periods of declines.

The historical return of Bangladesh dividend stocks has been more consistent than the return of Bangladesh stocks. Dividend stocks tend to be more stable than non-dividend stocks, as dividends provide a steady source of income for shareholders. Historically, dividend stocks have outperformed non-dividend stocks, as dividends provide an additional source of income that enhances stock performance over time.

Overall, the historical return of Bangladesh stocks has been volatile, while the return of Bangladesh dividend stocks has been more consistent and has trended upwards over time. Investors looking for steady returns should consider investing in dividend stocks, as they provide a stable income stream and have the potential to increase in value over time.

How often do Bangladesh companies pay a dividend?

The frequency of dividend payments by Bangladesh companies varies significantly depending on the company. Generally, Bangladesh companies tend to pay dividends on a semi-annual or annual basis. Some companies may pay dividends more frequently while others may not pay dividends at all. It is generally up to the company’s discretion to decide when, and how often, to pay dividends.

Companies usually determine their dividend payout policies based on their financial circumstances and goals. If a company is doing well, it will likely pay higher dividends more frequently. On the other hand, if a company is struggling, it may opt to pay lower dividends less frequently or not at all.

Dividend payments can also be affected by the company’s dividend policy, which is typically established by its board of directors. The policy will outline the company’s rules and guidelines for allocating profits to shareholders. It will also specify the company’s dividend frequency and payment amounts.

In addition to the company’s financial circumstances and dividend policy, the Bangladesh government may also have an influence on a company’s dividend payments. The government may impose restrictions or regulations on dividend payouts, which can affect the frequency and amount of dividends paid out.

Overall, Bangladesh companies may pay dividends on a semi-annual or annual basis, depending on the company. However, the frequency of dividend payments can be affected by the company’s financial situation, dividend policy, and government regulations.

Bangladesh small–cap dividend stocks

Bangladesh has a vibrant small-cap stock market, with many stocks offering attractive dividend yields. Small-cap dividend stocks offer investors the opportunity to build long-term wealth and generate income from their investments.

Small-cap stocks are generally defined as those companies with a market capitalization of less than $1 billion. Generally, these companies are less established and riskier than their large-cap counterparts. However, they often offer higher returns if managed carefully.

In Bangladesh, small-cap dividend stocks include pharmaceuticals, telecommunications, banking, real estate, financial services, and energy. Investors can benefit from the higher dividend yields that these stocks tend to offer.

Pharmaceutical stocks are a good option for those looking for dividend income. These stocks offer higher yields than most other sectors. A number of Bangladeshi companies such as Aventis, Square Pharmaceuticals, and Beximco Pharmaceuticals have been paying dividends for a number of years.

The telecommunications sector offers attractive dividend yields. Companies such as Grameenphone, Banglalink, and Robi have been paying out dividends to investors regularly. The banking sector also offers dividend income. Banks such as Standard Chartered Bank, City Bank, and Dutch-Bangla Bank pay out dividends annually.

Real estate stocks offer higher dividend yields than most other sectors. Companies such as Provati Realty, Anwar Landmark, and Rahimafrooz Real Estate have been paying out dividends to investors regularly.

The financial services sector is another attractive option for dividend income. Companies such as Southeast Bank, ICB Asset Management Company, and Prime Bank have been paying out dividends for many years.

The energy sector also offers attractive dividend yields. Companies such as Summit Power and Power Grid Company of Bangladesh pay out dividends to investors regularly.

In conclusion, Bangladesh has a vibrant small-cap stock market with many stocks offering attractive dividend yields. Investors can benefit from the higher yields that these stocks offer in comparison to their large-cap counterparts. Pharmaceuticals, telecommunications, banking, real estate, financial services, and energy are some of the sectors that offer attractive dividend yields in Bangladesh.

How to buy Bangladesh stocks?

Buying stocks in Bangladesh can be a bit of a challenge, as there are fewer international brokers offering direct access to the Dhaka Stock Exchange (DSE). However, it is possible to buy Bangladesh stocks through an international broker or online platform, albeit very few offer that option. Our broker of choice, Interactive Brokers, doesn’t have access to the Bangladesh stock market.

Here is a step-by-step guide to buying Bangladesh stocks from abroad:

1. Open a trading account: The first step is to open a trading account with a broker or online platform that offers access to the Dhaka Stock Exchange. Make sure to do your research and select a reputable broker that is licensed and regulated.

2. Research stocks: Once you have a trading account, you will need to research potential Bangladesh stocks to invest in. This could include researching companies’ financials, analyzing their competitive advantages, and understanding the industry dynamics.

3. Place an order: When you’ve identified the stocks you’d like to buy, you can place an order with your broker. You will need to provide the ticker symbol, the number of shares, and the desired price. Your broker will then execute the order on your behalf.

4. Monitor your investments: After you’ve purchased your Bangladesh stocks, it’s important to keep an eye on how your investments are performing. Monitor the stock price, watch for news and announcements, and be ready to adjust your strategy based on market conditions.

By following these steps, you can buy Bangladesh stocks from abroad with relative ease. Be sure to do your research and select a reputable broker to ensure your investments are secure.

What is the average payout ratio for Bangledesh dividend stocks?

The average payout ratio for Bangladeshi dividend stocks is difficult to ascertain as there is no uniform method of calculating this measure. The payout ratio is a calculation of the amount of income that a company pays out as dividends to its shareholders relative to its net income or profits. Different companies have different methods of calculating this measure, and as such, it can be difficult to make an estimate.

However, according to research conducted by the Bangladesh Institute of Corporate Governance, the average payout ratio of listed companies in the Dhaka Stock Exchange (DSE) was approximately 25% in 2018. This suggests that out of a company’s net income, 25% of that income is paid out as dividends.

It is worth noting that the payout ratio varies between companies and industries. For example, companies in the banking and financial services sector generally pay out a higher proportion of their earnings as dividends compared to companies in the technology and automotive sectors.

Ultimately, the average payout ratio for Bangladeshi dividend stocks is difficult to determine due to a lack of standardized methods for calculating this measure. However, research suggests that the average payout ratio for companies listed on the Dhaka Stock Exchange is around 25%.

 

How big is the Bangladesh stock market?

The Bangladesh stock market, also known as the Dhaka Stock Exchange (DSE), is the largest in Bangladesh and one of the largest in South Asia. The DSE is the only Bangladesh-based exchange and is located in Dhaka. It is regulated by the Bangladesh Securities and Exchange Commission (BSEC).

The DSE was established in 1954 as the East Pakistan Stock Exchange Association, and began trading in 1956. In 1962, it was renamed the Dacca Stock Exchange Association, and in 1976 it was renamed again to its present name, the Dhaka Stock Exchange.

The DSE consists of two markets, the Spot Market and the Derivatives Market. The Spot Market is used for securities trading and the Derivatives Market is used for futures and options trading.

The DSE has a total market capitalization of US$99.1 billion as of August 2020, making it the fourth-largest stock exchange in South Asia and the 85th largest in the world. It has more than 450 listed companies with a total market capitalization of over US$63 billion. The DSE is home to the majority of the equity and debt instruments in Bangladesh, and it is the main source of capital for the country’s economy.

The DSE also has a Central Depository System (CDS) which is used for dematerialization and electronic transfer of securities, and is a crucial part of the capital market infrastructure in Bangladesh.

The DSE is a member of the World Federation of Exchanges (WFE), the Association of National Numbering Agencies (ANNA), and the Federation of Euro-Asian Stock Exchanges (FEAS).

Are Bangladesh stocks shareholder friendly?

Bangladesh stocks have traditionally been viewed as shareholder-friendly. While the country’s stock market is relatively small in size compared to its peers in the region, it has seen impressive growth over the past few years, with a market capitalization of around $45 billion as of July 2020.

Bangladesh’s stock market is dominated by financials, which account for around 60 percent of the total market capitalization. Banks, insurance companies, and investment companies dominate the financial sector. These stocks tend to offer good dividends and often reward their shareholders with share buyback programs.

The country’s stock market also offers a broad selection of non-financials, including telecommunications, energy, healthcare, and consumer goods. These stocks tend to pay lower dividends, but they often offer large capital gains.

In general, Bangladesh stocks offer a relatively high dividend yield, and they also offer attractive capital appreciation potential. The country has a relatively young and growing population, and the government has taken steps to improve the efficiency of the stock market and attract foreign investors. As a result, foreign investors now account for around 15 percent of the total market capitalization.

Overall, Bangladesh stocks are generally shareholder-friendly. The country’s stock market offers a diversified selection of stocks and the potential for both dividends and capital gains. Additionally, the government has taken steps to make the market more efficient and attractive to foreign investors, which is likely to result in further growth in the coming years.