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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!
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B1 Intermediate US

5 High Dividend Paying Stocks - Should You Invest | Groww

27 Folder Collection
王惟惟 published on January 13, 2020

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