Placeholder Image

Subtitles section Play video

  • Dividends

  • After hearing the name dividends, basically four questions would come in the mind of retail investors like you and I

  • Firstly

  • What are dividends?

  • Second

  • How do dividends work and how do investors get dividends?

  • Third and most important

  • Which company has given its shareholders a lot of dividend

  • In the past year

  • Fourth

  • Should retail investors like you and I invest in dividend paying stocks or not

  • I, Jagdeep Singh, welcome you to the Groww channel

  • Let us start today's video

  • But before that

  • If you haven't yet subscribed to our channel

  • Then please subscribe

  • So that you can grow your money with Groww

  • What are dividends?

  • Now consider that I have a company, company A

  • And this company earns a profit of Rs. 100 every year

  • Now after earning the profit the company has two options about what to do with the profits

  • First,

  • The company can re-invest the profit in their business

  • So that they can expand their business

  • Secondly,

  • If the company doesn't have the possibilities to expand much

  • Then the company can share the profit among the shareholders

  • The third option the company has that out of a Rs. 100 earnings

  • Some money can be given to the shareholders

  • And some money can be used for growth

  • Now you must be thinking is it mandatory for a company to pay dividends

  • No, friends, I will clear one thing here

  • That no company has a compulsion that they have to pay a dividend

  • It is upto the company if they have to give a dividend or not

  • Now whenever we hear the term dividends, we get to hear four keywords

  • And many investors like you and I get confused on hearing that name

  • And the four common terms are

  • First

  • Announcement date

  • Second

  • Ex dividend date

  • Third, record date

  • Fourth, payment date

  • Now you must be wondering what the meaning of the jargons I used is

  • I will explain it to you one by one

  • Firstly, announcement date

  • Announcement date is that date when the company announces

  • That they are going to give dividends to the shareholders

  • And on the announcement date only the company

  • Announces the other dates as well

  • And after this comes ex dividend date

  • Ex dividend date is that date

  • Because of which, if you bought the stock even one day before

  • Then you are eligible to take dividends

  • Consider that the company's announcement date was 10th February

  • But the company said that their ex dividend date is 15th of march

  • The meaning of this is that

  • That if you bought that stock on 14th of march

  • Then you will get dividends

  • But on 15th march or anytime after that if you buy the stock

  • Then you won't get the dividend

  • Now I will talk about record date

  • What is record date?

  • Record date is that date

  • Where the company identifies which are the shareholders

  • They have to pay dividends to

  • And the record date normally comes the next day after the ex dividend date

  • And it comes on the next date because

  • Because if you buy a share a day before the ex dividend date

  • Then your settlement will happen in T+2 days

  • That will come on your record day

  • So you will be eligible to take dividend

  • And the final thing is payment date

  • This is the day where the company pays out the dividend directly in the bank account of the shareholders

  • Now I told you what a dividend is, how it works and how the company pays out its dividend

  • Now you must be most interested to find out

  • What are the companies that have given its shareholders the most dividends in the recent few years

  • Now I will tell you the name of those five companies

  • Who have given their shareholders a lot of dividends

  • The first name that comes in this list is Vedanta

  • Vedanta is a very big company whose business is spread out in many sectors

  • If I talk about its market cap

  • Then its market cap is of 53 thousand crores

  • But now you must want to know that in the past year

  • How much dividend has it given to its shareholders

  • So vedanta has, in the past year

  • Given a dividend of Rs. 18 to its shareholders

  • If I talk about its dividend yield

  • Then the dividend yield comes out to be 13%

  • But now you must be wondering how Vedanta's share price has performed in the past year

  • So, if I talk about Vedanta's share price, then Vedanta's share

  • In the past year

  • Has come down by around 26%

  • So, if we talk about Vedanta's net return in the past year

  • So from the price we get a loss of 26%

  • We get a dividend yield of 13%

  • The loss that Vedanta has given in the past year is -13%

  • If I compare this to NIFTY's performance

  • So NIFTY 50 in the past year

  • Has given a return of almost 10%

  • Now I will talk about the second company

  • And the second company is BSE ltd

  • Now after listening to this, you might get confused

  • That BSE is an exchange

  • So how did they pay dividend

  • So, BSE ltd is also a stock,

  • That trades at NSE

  • And BSE's stock doesn't trade at BSE

  • But it trades at NSE

  • If I talk about the dividend that BSE has given in the past year

  • Then in the past year BSE has given a dividend of Rs. 30

  • If I talk about dividend yield

  • Then the dividend yield is around 6%

  • If we talk about a 1 year return

  • How BSE has performed in price, so in terms of price in the past year,

  • It has given a -18% return

  • So if I see the price -18% return

  • If I see the dividend yield which is 6%

  • So the net loss that BSE has given its shareholders is of -12%

  • The third company is Coal India

  • The IPO of Coal India was India's biggest IPO

  • And it's monopoly is in the coal business

  • And it is a public sector company

  • If I talk about dividend then in the past year, Coal India has given a Rs. 30 return

  • And its dividend yield is around 6.8%

  • If I talk about price

  • Then its performance in price in the past year has been -20%

  • The fourth company in this list is REC

  • Rural Electrification Corporation

  • This is a company that finances electrification in India

  • And because of electrification there was a rise in demand in India in the recent times

  • Because of which this company came in the limelight

  • If I talk about dividends then in the past year, this company has given a dividend of Rs. 11

  • Per share

  • Then it's dividend yield is around 8%

  • But in this company a very interesting thing comes into picture

  • If I talk about price performance, then in the past year

  • The price performance of this company has been +30%

  • So if we talk about net return

  • Then their price performance returns turns out to be +30%

  • And the dividend yield turns out to be 8%

  • So this company has, in the past year

  • Given a net return of around 38%

  • The fifth company in this list is IOCL, this is an oil marketing company

  • Which is owned by the government

  • If I talk about the dividend pay out in the past year

  • Then this company in the past year has given a dividend pay out of more than Rs 9

  • If I talk about its dividend yield

  • So it is a little more than 7%

  • Now you must be wondering how the price performance of this company has been

  • In the past year

  • If I talk about price performance

  • Then the price performance of this company in the past year has been -7%

  • So the net return of this company is -7%

  • Plus 7.42%

  • So this company has given an almost positive return in the past year

  • Now let us come to the last question

  • That should retail investors like you and I invest in dividend paying stocks

  • And if we are investing then when and how should we invest

  • So, I have always told you

  • That every investor has a different risk

  • According to them, there is a different investment

  • Where they should make an investment

  • So dividend is right for those people

  • Who want a stable income

  • Because the benefit of dividend is that your uncertainty becomes very low

  • Because the company pays you dividend at regular intervals

  • So as you continue to get dividend, then your source of income is continuous

  • So for them, dividend paying stocks are very good

  • Who don't want to take volatile stocks or price risks

  • So, for what kind of investors aren't high dividend paying stocks good

  • So those people should not invest in high dividend paying stocks

  • Who want to invest in growth companies in the coming time

  • If I talk about growth companies

  • So those companies who keep a lot of growth capabilities in the coming time

  • And the companies who keep growth capabilities in the coming time

  • They don't pay their profit to shareholders directly

  • But those companies re-invest their profit into their company

  • And in the sectors where expansion is possible, they expand themselves in those sectors

  • So, those companies that pay a high dividend

  • Then it is also said in the industry, that those companies

  • Don't have a lot of growth possibilities left

  • Now in the mind of every investor this question comes that whenever he earns an income, how can he pay tax on that

  • Like if in stocks I have capital gain

  • Then on capital gains, I have to pay a certain amount of tax

  • So, even on dividends, do we have to pay taxes?

  • No, friends

  • For investors, dividend is a tax free income

  • Because the tax for that is paid at the company's level

  • And whatever dividend you get in hand

  • You get in your bank account,

  • It is completely tax free

  • So, friends, I will end this video with two thoughts for you

  • First,

  • If you want a fixed income and you don't want to take much risk

  • Then maybe for you high dividend paying stocks are really good

  • But if any investor wants to invest aggressively

  • Who wants to invest in growth stocks

  • Then maybe dividend paying stocks won't be that good for him

  • I will end this video with two questions for you

  • First question

  • In what category are you most interested to invest in

  • High dividend paying stocks, or growth stocks

  • And in this category, which stock have you chosen

  • You can comment down below and let us know

  • So that our other viewers can benefit from that

  • So, friends, Groww is bringing out a new series

  • With the name #AskGroww

  • Through which, if you comment a question on our videos

  • From that we will choose any ten questions and make a video

  • And answer those questions in great detail

  • So if you have any question in mind

  • Then you can go to the comment section of this video and ask us any questions

  • If you liked this video, press that like button, share the video with your friends

  • So that financial knowledge can reach them as well

  • And if you haven't yet subscribed to this channel, then please subscribe

  • And yes, in any video

  • We absolutely do not give any recommendation of buying or selling

  • We make every video purely for educational purposes

  • Happy investing!

Dividends

Subtitles and vocabulary

Click the word to look it up Click the word to find further inforamtion about it