Investors are turning to stocks that offer high dividend yields such as ITC and Castrol despite steeper valuations. This trend is due to skepticism towards mid-cap shares on increasing scandals such as price rigging. Large-cap stocks are outperforming on the perception that chances of corporate misgovernance issues are fewer than smaller players, where a few traders rig up stocks in collusion with promoters.

The investment strategy may not give steep returns in the short term, but offers safety and steady returns over the years as they pay high dividends. Dividend income is tax-free in the hands of shareholders. “Investors are on the hunt for fundamentally good companies where there is a visible earnings growth and that offer attractive dividend yields too,” said Pritesh Vora, director-India of US-based Equanum Advisors.

Source: The Economic Times

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