Dividend stock: Stocks with high dividend yield often attract heightened investors interest, but can it become a sole metric to add one in your portfolio? Dividend yield is the percentage of annual dividend paid by a company to its stock price, and indicates how much dividend income you earn relative to your investment.
“High dividend is attractive; however, the durability of the dividend is what matters,” explained Pankaj Pandey, Head of Retail Research-ICICI Securities, while adding that it can’t be the sole criteria for a stock selection. So what are the other key factors investors must consider before choosing a stock for investment and dividend? Let’s understand from the expert.
Dividend yield could be one of the factors to choose a stock for portfolio, but picking one only on the basis of that wouldn’t be a wise decision, according to Pandey.
“High dividend yield in absolute terms should not be the sole criteria for stock selection. Dividend yield could be the starting filter, not the investment thesis,” noted the expert.
For investors who want to add a dividend paying stock in their portfolio, Pankaj Pandey, highlights that a host of other factors would also matter.