Categories

10000 to 4crs in 18 months 1000rs to 50crs 300% returns 75% promoter holdings A 50 bagger A sureshot 5 bagger Analysis Another fraud? Auto ancillaries Bank sector Blind sell Brand plays Broking Bse Nse Buy calls cements Ceramics/tiles Counters I don't like Debt free businesses Delisting candidates demerger bets Disclosure- I own them Domestic consumption plays E-Commerce pick Education Exit at rallies Famous analysts Famous stocks FMCG Footwear future multibaggers Gems andJewellery Hidden gems High conviction ideas High dividend plays High potential small caps High ROE stocks Holding companies Hotel sector How they looted you.. Indian stock market Infrastructure sector Interesting Microcaps IT KPO Landbank plays largecap ideas Less than 5 PE stocks Liquor Logistics Market lessons Market outlook for 2013 and 2014 Market underperformers Meeting with the CEO Metals Monopoly businesses My 5 baggers My Favourite counters My paid stock recommendations My stock picking techniques nse bse tips Oil exploration Operator calls Paints Penny stock outlook penny stock updates Pharma sector Poultry stocks PSU Publicity freaks Real estate Renewable energy plays Safe bets Sell recommendations Share market Live shipping stocks short term call SOTP plays stock tips stock under 10rs Stocks to watch out for Strong bonus candidates Takeover candidates TATA product tea Textiles The 13 bagger The 45 bagger Trading companies Transformers Turnaround bets Tyres Uncertain/Risky business models Unique businesses

Search This Blog(Over 800 companies covered in the blog).

Please note

Note: The artciles are not research reports but assimilation of information available on public domain and it should not be treated as a research report.

Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”

Disclosure: It is safe to assume that I might have the dkiscussed companies in my portfolio and hence my point of view can be biased.Readers should consult registered consultants before making any investments
.

Archives : Old artciles

Saturday, January 31, 2009

"Till the dividends come home":-In indian stock markets

A bullish market discounts the element of dividend yields but they gain importance in a falling market.

The dividend yield ratio is computed by dividing the annual dividend per share with the current stock price of the company.So,if the annual dividend is around 40% it means that you gets rs 4 on every rs 100 you spend buying the stocks.This implies that as the stock prices rises,its dividend yield declines and the same stands true the way around too.So,at this point In these time,as share prices are moving down,dividend yield is on its way up.

In a falling market,shares of dividend paying companies becomes attractive in terms of dividend yield.These stocks are likely to outperform the markets when things don't look great in the equity market.And the good news is that a surprising number of companies in India have been consistent dividend payers even through in times when equity markets are bearish.So,a small retail investor with a low risk profile can enter into companies with a high dividend yield ratio.Small retail investors,who are primarily long term players,value high dividend yields.These investors bite this bait as nothing could be a more credible way of knowing a companys position than to see it give dividend cheques to shareholders.In India,the dividend yield of leading stocks has fallen over the last 5 years because of the continued bull run.

I must also say being in the market for last several years,Dividend yield,per se,is not a successful investment tool.At best,it could help identify asset of stocks from which one could pick and choose.So,buying into a company based purely on the dividend yield ratio may be futile.Strong cash flows are the key.The ideal dividend player is a company in a net cash position operating a business that does not need a lot of capital re-investment.So dont go by "ARUN"S theory before not getting it fully.

While profits can be cooked up,sales vouchers fudged,dividend cheques have to be paid.No wonder,the 100 year quote of John D Rockfeller,one of America"s richest man,echoes the sentiment even today.He said,"Do you know the only thing that gives me pleasure?Its to see my dividends coming in."I was 14 years old when i heard ths quote but still it looms large on my head.

Also,taking a call on whether to buy or not depends much on the investment horizion as its about the nature of business and the companys business model.But picking a good dividend stock isn't only about the yield.Investors need to take into account the growth prospects of the business,the overall business environment and the potential movement of the share price.The ideal combination is a stock that pays dividend and is also seen as a growth play.

During uncertain economic times,steady payers can rise rapidly in price,trimming dividend yields.Investors typically seek shelters in utiliies,for example in a bear market.

The most consistent dividend payers,despite being historically stable companies,are still subject to the vagaries of the market,especially if they operate in volatile economies.They are not nearly as risk-free as bank deposits.The prudent approach is to construct a diversified portfolio,with dividend payers at the core and growth stocks,bonds and cash deposits at the periphery.



Regards,
ARUN
I can be reached at:arunanalyst@rediffmail.com

Important Disclaimer&Privacy policy

This blog does not share personal information with third parties nor do we store any information about your visit to this blog other than to analyze and optimize your content and reading experience through the use of cookies.You can turn off the use of cookies at anytime by changing your specific browser settings.This privacy policy is subject to change without notice and was last updated on 20.3.2013. If you have any questions, feel free to contact me directly here: arunsharemarket@gmail.com Investment in equity shares has its own risks.Sincere efforts have been made to present the right investment perspective.The information contained herein is based on analysis and up on sources that I consider reliable. I,however,do not vouch for the accuracy or the completeness thereof.This material is for personal information and am not responsible for any loss incurred based upon it & take no responsibility whatsoever for any financial profits or loss which may arise from the recommendations above.The stock price projections shown are not necessarily indicative of future price performance.The information herein, together with all estimates and forecasts, can change without notice.
 
x

Subscription to Arunthestocksguru

Enter your email address:

Delivered by FeedBurner