Growth or Dividend Stocks: Which Should You Choose?

Dividend paying stocks, on the other hand, are usually associated with companies that have attained a certain size of operations and do not need large capital investments for further growth. These tend to have high cash flows, which they choose to return to shareholders in the form of dividends instead of ploughing back into the business.

Such companies grow at a steady pace and exhibit better resilience during an economic downturn. Investors in such stocks are exposed to very low downside risk and they prefer a steady stream of income, though the gains are modest. Some experts believe that the current rally is more liquidity driven than an outcome of change in fundamentals. Ambareesh Baliga, COO, Way2Wealth Brokers, says, "The recent market rally was mostly driven by liquidity through participation by foreign institutional investors (FIIs).

Source: Economic Times

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