Alternate yields

Dividend payouts are another way of earning from stocks

Do you know the only thing that gives me pleasure? It`s to see my dividends coming in.` John D. Rockefeller, renowned American Industrialist and Philanthropist as well as the founder of the Standard Oil Company, once said.

And for the Indian investor, there wouldn`t be a better time than now to pay heed to Rockefeller`s words. The long Bull Run has come to a longer end and the days of speculative gains are over as well. The time has come to look out for opportunities in every nook and corner and take advantage of it.

Well, here`s something Indian investors could look at and benefit from. Just as bonds, debentures and bank FDs offer you interest payments, stocks give dividends. Dividends are payments made by companies to its shareholders. When a corporation earns a profit or surplus, that money can be put to two uses: it can either be re-invested in the business (called retained earnings), or it can be paid to the shareholders as dividend.

Dividend Yield

Dividend yield is a ratio that illustrates how much a company pays out in dividends each year relative to its share price. Dividend yield is a way to measure how much cash flow you are getting for each rupee invested. Investors who require a minimum stream of cash flow from their investment portfolio can secure this cash flow by investing in stocks paying relatively high, stable dividend yields.