Dividend Yield Investing

Investments in equities fetch returns in two forms. One is capital appreciation and the other is dividend. In a high growth economy like India, the focus of most investors tends to be on capital appreciation. They do not pay much attention to dividends. This is a mistake. Dividends play a key role in the valuation of a company. In value investing, dividend yield is a key parameter which determines whether a stock is attractive. It has been observed that a company which has high dividend yield is expected to contain downside for investors in comparison with a company which has low or no dividend yield. A company’s dividend yield is calculated by dividing dividend per share paid by the company by its share price. (more…)

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Growth At Reasonable Price

Right selection of stocks in investing is crucial to make money. One may follow different approaches towards stock selection but it all boils down to consistency in analysis, stock-picking and ultimately allocation – these 3 are the key ingredients of successful equity investing.

Conventional wisdom suggests two primary ways to analyse a stock. Fundamental analysis, which aims to ascertain the fair value of a business (stock). It takes into account quality of business of a company, demand and supply forces, pricing environment, and growth rates among other factors. Technical analysis, which assumes that the elements that impact movement of markets are easily predictable and all information about a stock is captured by the price of a stock at that moment in time. Technical analysts evaluate stocks on the basis of price and volume recorded on the stock exchanges. These two styles of analyzing stocks are applied in the following way: successful investors prefer fundamental analysis to ascertain the valuation of the stock and technical analysis to time the entry into and exit from a stock.

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