Dividends-- Whats the strategy

Companies which are not in the growth cycle but have a lot of cash generation and profit generation dont have opportunities to invest their money in their existing business and hence the best option for them is to pay back the money to its shareholders.

Dividend Yield is the % return ( yield) on the price of your stock basis the dividend received from the company.

So if the purchase price of your company is at 100Rs and the company pays 5 Rs as dividend-- then the dividend Yield is 5%.

Dividend Yield is a great strategy in a couple of places
1. Recessionary market
2. Getting income from companies which have a history of giving dividends -- HUL for example.

There are some mutual funds which are focussed on dividend yields.-- UTI dividend yield is one good example- You can see the link which are the companies in which it is invested in here. It has given a return of 63% over a one year period.

Where do i see a great opportunity to invest in such funds... when there is a correction.... great opportunity to increase the dividend yield as well as go for capital appreciation.

so dont believe the time is ripe yet.

Of course one can always build a portfolio of such dividend stocks--- as and when the markets gets into a correction.

Happy Investing.