Many investors are lapping on to stocks where the dividend payout is good even though the valuations are expensive. But this may not be such a wise move. We believe that investors need to look at dividend yield of companies while investing in their stocks. Dividend yield is nothing but the company's dividend per share divided by its stock price. Thus, even if the dividend paid out is good, if the stock price is very high, the yield will not be that great.
At the end of the day, when investing in equity markets, an investor has to look at two factors. One is the benefits of capital appreciation. The other is the dividend yield. The two combined would constitute the total return that would accrue to an investor. And this return will not be strong, if the stock price of any company is disproportionately high. Thus, strong corporate governance, good growth prospects and a healthy dividend policy are certainly prerequisites for investing in equities. But always keep an eye on valuations too.
Source: Equity Master
Related Articles:
Are high dividend stocks safe?
Posted by D4L | Sunday, December 12, 2010 | ArticleLinks | 0 comments »________________________________________________________________
Subscribe to:
Post Comments (Atom)
~
Popular Posts Last 30 Days
-
The best dividend stock nobody is talking about is an undervalued, high-dividend chemical company poised to grow at an exponential rate. Wit...
-
If any investor has stood the test of time, it is Warren Buffett. For years, the “Oracle of Omaha” has had a rock-star-like presence in the ...
-
Last week, we found out that the consumer price index (CPI) went up by 8.3% in April, more than the 8.1% estimate. Meanwhile, the ongoing wa...
-
A full-blown recession, or the late-year rally in Wilson’s view – the natural move for investors will be toward defensive stocks, moves to p...
-
The Dividend Kings, which are those stocks with at least 50 years of dividend growth, is an excellent place to find high quality names. Ther...
-
If any investor has stood the test of time, it is Warren Buffett, and with good reason. For years, the “Oracle of Omaha” has had a rock-star...
-
When a retailer has a sale, it's often celebrated with banners, signs, and commercials telling customers not to miss out on the spectacu...
-
Mid-cap dividend stocks are the best bargain on the board right now. I love them because lame income investors don’t consider them. They fix...
-
When shares trade at a 40% discount to book value, they should have substantial flaws. This REIT isn’t perfect, but it deserves a higher rat...
-
5 big yields, all with upside. But I've got 1 more share to mention. With most of the earnings releases out, the charts are updated to s...
0 comments
Post a Comment
Post a Comment
Note: Only a member of this blog may post a comment.