Dividend yield based investing is one of the oldest methods of equity investments. One of the important techniques to identify the right stocks which can light up your investments is the Dividend Yield.
A company's dividend policy is often seen as a testament to its confidence in future earnings growth & sustainability of the business. In another words, a good track record of dividend payments is a strong sign of reliability & an indication that the company has stable business revenue model with sustainable profit growth expectations.
High dividend yield stocks are more likely to provide greater degree of protection to investors than other stocks in falling equity market. On the other hand, these stocks show good possibilities of capital appreciation in reviving market. An investment in these stocks in volatile market could unlock significant value as and when the markets pick up.
Stock picking on the basis of dividend yield aims to avail the triple benefits of dividend income, downside risk management & potential for capital appreciation.
A careful selection of high dividend yield stocks in portfolio could therefore unlock value, providing potential for wealth creation over the medium to long term investment horizon.
Tata Dividend Yield Fund has 3 broad investment components of the portfolio:
Investments in Dividend Yielding stocks -
The Scheme shall invest in dividend yielding companies which have paid dividends (or done a buyback) in at least 1 out of 3 preceding Financial years. The Scheme would currently prefer to invest in companies with dividend yields higher than Nifty 50 Dividend yield.
Contra to Consensus approach portfolio -
The Fund would actively seek to capture the journeys of companies from Contrarian bets to Consensus bets (stable companies currently out of favour to being the most preferred stocks in markets).
Diversification of Portfolio -
The Fund also has the flexibility to invest in REITs and InvITs and Overseas securities.