Tuesday, November 2, 2021

Top 10 – Best Dividend Paying Stocks

What is Dividend in Stock market?

A dividend is a portion of a company’s profits that it distributes to shareholders. Dividends are paid out in addition to any gains in the value of the company’s shares and reward shareholders for holding a stock.

Companies in certain sectors are known for paying dividends, and dividends are more common among established companies that can afford not to invest all of their profits back into the business. Companies might pay special, one-time dividends, or they may pay dividends at regular intervals, such as every quarter or once a year.

What is Dividend Yeild?

Dividend yield measures the quantum of earnings by way of total dividends that investors make by investing in that company. It is normally expressed as a percentage.

The formula for computing the dividend yield is :

Dividend Yield = Cash Dividend per share / Market Price per share * 100.

Suppose a company with a stock price of Rs 100 declares a dividend of Rs 10 per share. In that case, the dividend yield of the stock will be 10/100*100 = 10%.

Companies with high dividend yield normally do not keep a substantial portion of profits as retained earnings. Their stocks are called income stocks. This is in contrast to growth stocks, where the companies retain a major portion of the profit in the form of retained earnings and invest that to grow the business.

Dividends in the hands of investors are tax-free and, hence, investing in high dividend yield stocks creates an efficient tax-saving asset. Investors also take recourse to dividend stripping for tax saving. In this process, investors buy stocks just before dividend is declared and sell them after the payout. By doing so, they earn tax-free dividends.

Some key dates in Dividend announcement:

List of High Dividend yeild stocks are given below:

Finally, there are two ways to make money from investing, income and capital gains. Dividends represent the income side of that equation. The higher the dividend yield, the more income you will receive for each rupee you invest.