Will dividend yield stocks make you rich?

The lowdown on dividend yield mutual funds

These have not performed well, so far. Here's why:

1. The last few years has seen an appreciable rise in shares prices. This means fewer opportunities for dividend yield funds to invest their money in.

2. Growth stocks have done phenomenally well in the last few years dwarfing the returns from dividend yield stocks.

3. There is the problem of illiquidity, as these scrips are less sort out.

4. It is difficult to sell illiquid stocks. So, MFs may be forced to sell liquid stocks, which may affect the portfolio performance.

Not only have these funds underperformed but they have not managed to restrict the loss in the recent downslide.

To buy or not to buy

1. Don’t just go by dividend yield. The basic investment criteria, ie, the future growth potential should be kept in mind.

2. Do your detailed research to make sure that dividends are likely to continue in the future, too.
3. Regular follow-up is essential. When the bull market kicks off, these stocks are likely be the first movers.

4. Investing in the equity market is no simple math. It demands hard work, patience and the willingness and ability to take risks!