Mumbai, November 20, : , Apart from the stellar rise of stock valuations and bumper IPOs in 2018, 2021 will be remembered by healthy dividend payments made by certain listed entities. Aurum Proptech and Clariant Chemicals were able to pay large dividends due to an accelerated economic recovery and healthy demand.
Vijay Dhanotiya (Lead of Technical Research at CapitalVia Global Research) stated that these companies share a common trait: they consistently make good profits, are consistent getting great results, and thus they have paid good dividends to their shareholders.”
The excess cash that is in companies could also be a reason.They are also expected to do well in the future.
Notably, Page Industries, Indian Oil Corporations, Coal Indias, Satluj Jal Vidyut Nigams, Power Finance Corporation and Hindustan Petroleum have all provided healthy dividends for their investors.
According to Nandish Shah (Senior Derivative & Tech Analyst at HDFC Securities), “Investors view the payment of dividends as a sign company strength, a signal of stability company and a sign that management is optimistic about future earnings.”
The downside to dividends is that the money paid to investors can’t be used for business growth.
Santosh Meena is Head of Research for Swastika Investmart.He stated that “it is always considered to have good sign” that a company paying regular dividends (it) signifies it is rewarding shareholders through sharing the profits.
However, it’s not a general rule as companies in the growth stage prefer to reinvest the profits rather than distributing them to shareholders.
However, companies in the mature stage are more likely to distribute their dividends regularly.
When choosing stocks to pay high dividends, investors should consider dividend yield over dividend amount.
Dividend yield can be described as a ratio which helps investors to understand the dividends a company pays each year in relation to their stock price.
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