Dividend Stocks: When a person buys stocks, he/she generates returns from two sources – capital appreciation and dividends. While capital appreciation is the rise in the market price of an investment, a dividend is paid by a company to its shareholders as a reward for investment in the business.
A dividend also serves as a barometer of a company’s health. Companies that pay dividends make the dividend an important part of their capital allocation strategy.
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One primary benefit of investing in dividend-paying stocks is that well-established companies increase their payouts after regular intervals. This rising dividend payout gives confidence to the shareholders that the earnings are real.
Investors often consider investing in dividend-paying companies to be more lucrative as they get a share of the company’s profits every year in the form of dividends. For many, dividend is a part of long-term wealth creation.
Dividends also help in capital protection. If a high dividend-paying stock moves southward, its dividend yield makes it so attractive that investing just for dividends makes up for the risk.
Domestic Brokerage firm Religare Broking said that a stock with a high dividend yield pays profits in the form of dividends at regular interval. It is also an indicator of the return that the investors earn on investment.
Religare Broking has shared a list of 10 highest dividend-paying PSU stocks with strong financials.
Dividend Stocks: 10 PSU stocks with highest dividend yield
Stock dividends also have a tax advantage for the shareholders as dividends are not taxed till the time an investor sells stocks from his portfolio.
(Disclaimer: The advice given here to invest in stocks is given by a brokerage house. These are not the views of Zee Business. Before investing, consult your advisor.)
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