What is Dividend Investing?
Some investors, such as retired people, need a reliable source of income. With equities, you might need to sell your shares in order to realise gains if a stock increases in value. Fortunately, it is possible to generate passive income through equities investing, without even selling!
Welcome to the world of dividend investing.
The portion of a company's profit that is delivered to the shareholders is known as a dividend. When you invest in dividends, you purchase the stocks of businesses that regularly pay dividends. As a result, you have a passive income stream and portfolio's market value increase.
What Are The Benefits?
Value for money : These stocks are usually less risky and don’t lose much value in market downturns
Fight inflation : Growing dividend yields will help you fight against the rising inflation rate and void it
Passive Income : You get a much higher return in the form of passive income compared to Fixed Deposits or Recurring Deposits
Capital Appreciation : Along with the dividend the company pays out, the rising stock price is another source of profit for you
You can either choose to make a portfolio of 10-15 companies with consistent high dividend yields on smallcase or buy one of it’s existing offerings
Estimate the expected dividend based on historical dividend yields
Buy the portfolio on smallcase
Now, any dividends declared for the stocks in your smallcase will be credited directly to your bank account on the pay-out date
Here are a few screeners to help you choose the right companies.
Strong balance sheet and with low debt, check the debt to equity ratio
Capable management with good corporate governance
Make sure the company is available at a fair price to maximise profits
Dividend pay-out ratio is increasing consistently over the years
Head over to our collection of Rupeeting's smallcases and choose from a wide range of strategies that make you money!