[vc_row][vc_column][vc_column_text css=”.vc_custom_1647325228840{border-top-width: 1px !important;border-right-width: 1px !important;border-bottom-width: 1px !important;border-left-width: 1px !important;border-left-color: #000000 !important;border-left-style: dotted !important;border-right-color: #000000 !important;border-right-style: dotted !important;border-top-color: #000000 !important;border-top-style: dotted !important;border-bottom-color: #000000 !important;border-bottom-style: dotted !important;border-radius: 3px !important;}”]
Fixed Deposit in High Dividend Yield Stocks
[/vc_column_text][vc_separator css=”.vc_custom_1647339034936{margin-bottom: 30px !important;}”][vc_column_text css=”.vc_custom_1647339101699{margin-bottom: 15px !important;}”]There is old saying in the stock market, “A chicken for its eggs, bees for their honey, cows for her milk and a stock for its dividends“. An important attribute to consider while investing in a stock is to look at its dividend payout history. Dividend-paying firms are preferred over non-dividend paying firms for a variety of reasons:
- Investors are incentivised for holding the stocks
- Dividend distribution signifies the wealth-generating ability of the company
- A stable dividend distribution history shows that the company takes care of its shareholder as well
Some ace investors have revealed that they never sell some of their holdings because they provide great dividend yields. A dividend is a regular payment made by the company to the shareholders from their profits or retained earnings. Quite like interest on a deposit, you’d wonder? Well, much like that!
A typical bank fixed deposit in India gives an annual return of about 5-6%. We thought how about we try to replicate that through a portfolio of stocks. The upside: Dividend yield higher than bank interest rates, probable capital gain and better liquidity.
Here is a list of top Indian companies with significant dividend yield that you can do a fixed deposit in:
[/vc_column_text][vc_single_image image=”68553″ img_size=”full” alignment=”center” css=”.vc_custom_1647337954794{border-top-width: 1px !important;border-right-width: 1px !important;border-bottom-width: 1px !important;border-left-width: 1px !important;border-left-color: #000000 !important;border-left-style: solid !important;border-right-color: #000000 !important;border-right-style: solid !important;border-top-color: #000000 !important;border-top-style: solid !important;border-bottom-color: #000000 !important;border-bottom-style: solid !important;border-radius: 1px !important;}”][vc_column_text]You can see in the second to last column what the 3-year average dividend yield was for the companies listed. The dividend yield of almost all these companies beat the interest on a bank fixed deposit!. Some companies follow a constant dividend payout ratio, some follow a variable and some even pay special dividends incase of extraordinary events. All this is done to keep the shareholder happy and deter them from selling their shares when times are tough.
Two companies, however, stand out in terms of both stock performance as well as dividend yield. They are SJVN and Hindustan Zinc. Both these provided positive capital gains as well as over 9% annual dividend yield in the past 3 years. Now you must ask yourself, “why wasn’t I invested with this companies?”.
Most of these companies are government-owned, and so, their dividend payment regime is more or less fixed. This allays our fear of whether these companies will pay dividend in future.[/vc_column_text][vc_zigzag][vc_column_text]
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