Dividends are payments made by a firm to its shareholders. When someone holds High dividend-paying stocks, they receive a portion of the company's profits as dividend.
Let's try to get this statement into numbers...
For e.g. Assume you invest in a stock that provides a 40% dividend per share on its face value of Rs 10. Now, you hold 10 shares of the company. In that situation, you would get Rs 40 in dividends (Rs 4 * 10 shares).
Dividend investing is the practice of purchasing stocks that pay dividends to generate a consistent passive income stream from your assets.
This income is in addition to any gains in the share price of the company.
When it comes to dividend investing, investors have two approaches to implement i.e. high dividend yield approach or a high dividend growth rate strategy.
The high dividend yield strategy focuses on slow-growing firms with substantial cash flow. This enables them to fund significant dividend payments in the immediate manner of income.
The high dividend growth rate strategy focuses on stocks that pay modest dividends currently, but hold the prospect of paying out much higher dividends in future.
Companies like Hindustan Unilever (HUL), Sanofi India, Britannia Industries, Bajaj Auto and Asian Paints are among the companies which have paid high dividend payouts over the years.
Since you're interested in dividend stocks, check out Equitymaster's stock screener which lists the high dividend paying companies.
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