Dividend yields in a high interest rate scenario

Usually a good strategy is to go for a portfolio which has got companies which give good divendends year on year ( yoy). Dividends are tax free and hence provide a good source of income apart from capital gains

Usually divendend range around 1-3% yields. When a company annouces divedends it is on the basis of the book value of the share . The book value can be rs 1 while the share price is rs 15.

The dividend yield is calculated on the basis of what the market value of the share is.

The table above is an excerpt from the magazine moneytoday which also talked about dividend paying companies.

In a high interest rate scenario, companies want to conserve cash,hence they reduce the dividend that they pay out. Hence if you look closely, a lot of the companies have reduced their payouts in the recent past.

However , there are companies , whose growth is always going to be slow while they generate a lot of cash, for them the best strategy is to pay out a higher dividend and keep their investors hooked on.

Look for such companies which pay a high dividend... They are good bets in such times.

Happy investing