Synopsis
Nine months back there was hardly a stock with a dividend yield matching the interest rate of a savings bank (SB) account. Today, some have yields on par with fixed deposit rates. Now, consider a different point: The subjective nature of dividend payout and capital gains. Dividend payment is not only a function of how much money a company is making, but also a habit of the management, or its intent. There are companies sitting on cash piles but with low dividend-payout ratios. Capital gain is a function of many other things, some under the control of stock market players, and some not so much so. So, better focus on an element where there is still some certainty if management has the intent. And that is dividend yield.
What is the dividend yield of the stocks in your portfolio? Wrong question. Because, forget the yield, most investors may not even have bothered to check whether they received any dividend on their stocks. And that’s because we are all chasing capital gains in the stock market.Nothing wrong with that. But there are times when it is important to look at dividend yield as well, because it not only provides a steady income but also helps set the
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