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Time to cash in on dividend stories
Wed, 16 Mar Pre-Open

If one looks around for investment themes in current times, one could come across many. There are those advocating investment in commodities due to demand supply mismatches. The latest crisis in Japan may only accentuate this in the long term. Investment in gold due to the rampant money printing in developed markets is also a strong argument. But we would like to draw attention to a theme that is a value investor's favourite during times of market meltdowns. It goes by the name 'high dividend yield stocks'. High dividend yield essentially means stocks that earn higher dividend per share as compared to their market price. A ratio of dividend to price per share indicates the investors' return on capital purely from dividends earned.

During times of earnings downgrades we often find investors lapping on to stocks where the dividend payout is good. But the sad part is that they do so even if the valuations are expensive. The dividend yields are in fact a safer way to buy into stocks that have a steady history of dividend payouts.

Another advantage of having fundamentally sound dividend stocks in one's portfolio is the fact that these tend to be relatively stable vis-à-vis the markets. That is in the event of a considerable fall in overall markets, the prices of these stocks remain relatively less affected. This is primarily because during times of falling prices, the dividend yields of these stocks become very attractive. As a result of this, the downside in these stocks is limited until and unless there is something seriously wrong with the fundamentals of the company. Moreover, these stocks tend to appreciate with the general markets, though the rise may not be very spectacular. Thus, dividend stocks are a good option for investors with lower risk appetite and who prefer a steady income with a scope for capital appreciation.

However, from an investors' point of view, the 'total return' on the stock is more appropriate yardstick as compared to only the capital appreciation or only the dividend yield. This is because the gains from such stocks are a factor of dividends earned plus capital appreciation over the years.

The current market scenario leaves sufficient scope for investors to hunt for long term bargains. But it would be worthwhile to arm one's portfolio with high dividend yield stocks, just in case the weakness lurks longer than expected.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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Stock Market Updates

ASTER DM HEALTHCARE LTD Share Price Up by 8%; BSE HEALTHCARE Index Up 3.3% (Today's Market)

Sep 18, 2020 03:34 PM

ASTER DM HEALTHCARE LTD share price is trading up by 8% and its current market price is Rs 148. The BSE HEALTHCARE is up by 3.3%. The top gainers in the BSE HEALTHCARE Index are ASTER DM HEALTHCARE LTD (up 7.7%) and DR. REDDYS LAB (up 9.9%). The top losers are ALKEM LABORATORIES (down 0.1%) and FORTIS HEALTHCARE (down 1.6%).

DILIP BUILDCON LTD Share Price Down by 5%; BSE CAPITAL GOODS Index Down 0.3% (Today's Market)

Sep 18, 2020 03:34 PM

DILIP BUILDCON LTD share price is trading down by 5% and its current market price is Rs 377. The BSE CAPITAL GOODS is down by 0.3%. The top gainers in the BSE CAPITAL GOODS Index are AIA ENGINEERING (up 7.3%) and FINOLEX CABLES (up 1.8%). The top losers is DILIP BUILDCON LTD (down 5.2%).

DR. REDDYS LAB Share Price Up by 10%; BSE HEALTHCARE Index Up 3.4% (Today's Market)

Sep 18, 2020 03:32 PM

DR. REDDYS LAB share price is trading up by 10% and its current market price is Rs 5,497. The BSE HEALTHCARE is up by 3.4%. The top gainers in the BSE HEALTHCARE Index are DR. REDDYS LAB (up 10.1%) and NATCO PHARMA (up 14.1%). The top losers are ALEMBIC PHARMA (down 1.2%) and FORTIS HEALTHCARE (down 1.4%).

ORIENT ELECTRIC Share Price Down by 5%; BSE 500 Index Down 0.0% (Today's Market)

Sep 18, 2020 03:32 PM

ORIENT ELECTRIC share price is trading down by 5% and its current market price is Rs 215. The BSE 500 is down by 0.0%. The top gainers in the BSE 500 Index are NATCO PHARMA (up 14.1%) and RAJESH EXPORTS (up 11.6%). The top losers are ORIENT ELECTRIC (down 5.3%) and ESSEL PROPACK (down 8.1%).

GUJARAT GAS Share Price Up by 6%; BSE OIL & GAS Index Down 0.2% (Today's Market)

Sep 18, 2020 03:26 PM

GUJARAT GAS share price is trading up by 6% and its current market price is Rs 322. The BSE OIL & GAS is down by 0.2%. The top gainers in the BSE OIL & GAS Index is GUJARAT GAS (up 5.5%). The top losers are BPCL (down 1.1%) and IOC (down 1.5%).

Indian Indices Trade Higher; Dr Reddy's Lab & Cipla Surge Over 8% (Today's Market)

Sep 18, 2020 12:30 pm

The BSE Sensex is trading up by 76 points, while the NSE Nifty is trading up by 41 points.

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