Dividend yield stocks belong to those companies that declare dividends regularly. CNBC-TV18.com lists the top-performing dividend yield stocks
The stock market is currently in a corrective phase across the board and the importance of dividend yield stocks cannot be ignored now. The reason being these stocks are generally unaffected by market fluctuations and is rather packed with a high yield on investments. A good dividend yield will give a steady income as long as the company will pay dividends at the same rate, even if the market price of the stock changes subsequently.
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So, before we get into more details, let’s first understand what dividend yield stocks are and what affects them
Dividend yield stocks are shares of companies that declare dividends regularly. The dividend is paid to shareholders in the form of additional shares in the company.
Assuming the dividend is not raised or lowered, the yield will rise when the price of the stock falls. And conversely, it will fall when the price of the stock rises.
Now, let's take a look at top dividend yield stocks
IDBI Capital has released its quality dividend yield report for December 2022.
Here's the list of top 10 dividend yield stocks and their performance as per the IDBI Capital report:
|Stock||Dividend yield||Dividend payout||Latest dividend per share||5-year average return on equity (RoE)|
|GAIL (India)||10.70%||36.23%||Rs 10||13.31%|
|Power Finance Corporation||10.10%||22.61%||Rs 14||25.67%|
|Coal India||9.10%||60.36%||Rs 20.5||48.81%|
|Phillips Carbon Black||7.10%||44.31%||Rs 10||19.36%|
|Power Grid Corporation Of India||6.70%||61.16%||Rs 14.8%||22.90%|
|Ircon International||6.70%||39.69%||Rs 4.2||10.61%|
So, are these stocks worth investing in — And who should invest?
Yes, there are multiple reasons for an investor to choose a dividend yield stock, experts say. Dividends are an important source of wealth creation in equity markets. So, investing in them make sense.
In a previous conversation with CNBC-TV18.com, Pankaj Shreshta — Head-Investment Advisory Division — Prabhudas Lilladher has said that dividend yield stocks can be considered by investors who want stability in their portfolio and prefers low volatility in returns.
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In other words, this category is good for new and conservative equity investors.
The explanation: given the higher yield and stable businesses, high dividends yield stocks are less volatile and fall lesser in a down market. Thus, dividend yield stocks can offer investors an opportunity to participate in equity markets with lesser volatility.
Generally, high dividend yield stocks are businesses in a mature phase with strong cash generation and slower growth rates. At times, quality growth franchises could also be available at attractive dividend yields due to the short-term challenges of the business.
Additionally, these stocks gain back their value during harsh market movements, making them a reliable option for risk investors on capital protection. These stocks, when added to the portfolio, help to diversify the risk potential effectively, experts say.
Why you should pick stocks with high dividends?
These stocks could serve as a steady source of income over a period of time. Being high dividend ones, there are high chances of them being strong performing ones and hence consistent income is expected.
They substantially increase stock investing profits, provide an extra metric for fundamental analysis, reduce overall portfolio risk and help to preserve the purchasing power of capital.
First Published: Dec 29, 2022 4:50 PM IST
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