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Last Updated : Mar 08, 2019 08:41 AM IST | Source:

Stock Market Classroom with Udayan Mukerjee | Should you keep dividend stocks in your portfolio?

Don't be fooled just by the higher amount of payout and ignore management's plan for the company

Udayan Mukherjee

When a long-term investor is looking to buy stocks, there are many factors he/she should take into account. And one of the key points to focus on is dividend yield.

The reason being, overall return from a stock is a combination of capital appreciation and dividend yield. For investments with 15-20 years of time-horizon, dividend yield can make up for 40-50 percent of total return from a stock.

A word of caution. There is another side to high dividend payout. Don't be fooled just by the higher amount of payout and ignore the management's plan for the company. Because sometimes a company can give high payout if it fails to deploy capital in business, which could be a bad sign.

Watch the latest episode of Stock Market Classroom, where Udayan Mukherjee, Consulting Editor of CNBC TV18, tells you what are downsides to buying a stock that pays high dividends and what precautions to take before buying such a stock.

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First Published on Mar 8, 2019 08:32 am
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