Stock markets performed well during 2008-09 period. Investors are now expected to take a more selective approach while investing this year. Given the limited scope for appreciation in shares this year, few brokers feel that it would be more appropriate to look for high dividend yielding stocks.
Calculated as annual dividend per share divided by current market price, dividend yield is used to measure the return an investor receives on his investment relative to the stock price.
According to Centrum Broking MD Devesh Kumar, “A company can potentially be a good investment bet if it is growth-oriented and offers dividend yield of 5-7%. One has to see how much cash flows it would be able to generate from its operations on which depends the quantum of dividend and dividend yield.”
Ambareesh Baliga, VP of Karvy Stock Broking said, “After the bullish trend in 2009, the mood will remain cautiously optimistic in the current year. If there is any correction in the market, investors would like to sit on cash or take exposure to debt rather than investing in equities”.
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