What is Dividend Investing and How to find Dividend Stocks

How do we get a consistent income and good growth both at the same time from our investments ? In this article we will talk about what is dividend Investing and what the important things we have to consider . This in article we will see the concept of Dividend Investing , The risks involved and some examples of stock which are considered to be good Dividend Stocks .

What is Dividend and Dividend Yield ?

When company earns the profit , it has two choices

1. Either invest that profit in company back and grow the company
2. Pay back that profits to shareholders so that they get some return from the investments they made .

So generally companies declare some part of the total profit as Dividends . Suppose a Company has a profit of Rs 200 crores and it wants to give 100 crores as Dividends back to shareholders and there are total of 10 crores shares in the market . It will come out to be dividend of Rs 10 per share , Now if the fave value of each share is Rs 100 , then it will be called as 10% dividend declared by company , but if Market price of that same share is Rs 200 , then the dividend yield would be just 5% (10/200) .

So what matters is Dividend Yield and not the percentage of Dividend declared . Suppose you have 200 shares of Infosys and its current market price is Rs 1000 , where as the fave value of Infosys was Rs 10 and Dividend per share is declared at Rs 50 , then the dividend percentage will be 500% (50/10) , but the yield would be just 5% (50/1000) and you Dividend will come out to be just Rs 10,000 , which is 5% of your shares current market value of Rs 2,00,000 .

See the Video Below to understand more .

How to create a regular and consistent Income from Dividend Investing ?

So the basic idea here is to invest in those stocks which have excellent history of paying Dividend . The important point is to note the dividend yield from these stocks . You might be interested in Stock Market Analysis using Nifty PE

Advantage of Dividend Investing

Your Investment Growth : The stock price will have good growth over long term and the share prices will grow .

Consistent Income from Dividends : You can also get good income from the dividends you receive from Stocks

Tax Free Income : As per current income tax rules , The dividend received from Stocks are 100% tax free , Unlike Mutual funds dividend where there is Dividend Distribution Tax .

Note : So Even if your Stock grows at 7% per year over long term and has a Divident payout of around 5% every year .. your actual return from the stock would be 12% approx which is a very good return .

Example of Some good Dividend Paying Stocks

• Reliance Industries
• Novartis
• KEC International
• Asian Paints
• Hero Honda
• Corporation Bank
• Bajaj Holdings
• Canara Bank
• Bank of Baroda
• Castrol India
• GSK Consumer Healthcare
• Garware-Wall Ropes
• Tata Chemicals
• J&K Bank
• Varun Shipping
• VST
• Manugraph Ind
• Tamil Newsprint
• Coromandel Fert
• NIIT Tech
• HCL Info

Also see this chart with Top 20 Dividend Paying Stocks list by

Where to find out the Dividend Information for a Stock in BSE and NSE ?

Click Here For BSE
Click Here for NSE

What are the important factors while choosing a stock for Dividend Investing and Doing Analysis for its Dividend Paying Capacity ?

See this NTPC Analysis by TIP GUY , You can refer to his blog for all your Dividend Investing related queries , He is an expert in the Topic

See other articles on Divident Investment Here

Conclusion

People who have good amount of money to invest in stock market and also want consistent returns per year can look for investing in good reserched Dividend Stocks . This will give them good investment growth and regular income .

Tagged as: dividend, stock market, value investing