Best Dividend Stocks in India For Income Investors.

Most of the people who enter the stock market aims to make money through capital apprecaition. “Buy low and sell high”. The difference is the profit or the capital appreciation.

However, there is also a second way to make money from stocks- which many people ignores. This is called dividends.

What exactly is a dividend?

“A dividend is a distribution of a portion of a company’s earnings, decided by the board of directors, to a class of its shareholders. Dividends can be issued as cash payments, as shares of stock, or other property.”

For example, let’s say you are holding 10 stocks of HDFC Bank. And the company announced an annual dividend of Rs 11 per share. Then, you will receive an amount of Rs 11*10= Rs 110 as dividends that year, which will be directly credited to your account.

The best part of dividend income is that you do not need to sell your stocks in order to make money. The price of your stocks might appreciate with time and you’ll also receive a regular dividends while you’re holding those stocks.

Another amazing point regarding dividends is that ‘dividends increase over time’. For example, if HDFC Bank gave a dividend of Rs 11 this year. However, next year, the company may increase its dividends to Rs 13–14 if the company is consistently making profits. Therefore, without buying any more shares, your dividend income will increase with time.

That’s why, dividends are a good way to make passive money.

Best Dividend stocks in India:

Here are few best stocks in India which has a good history of giving consistent dividends to their shareholders:

Source: 10 Best Dividend Stocks in India That Will Make Your Portfolio Rich.

Closing Thoughts:

Although dividends are a good way to make money from stocks, however the biggest point of concern regarding dividend stocks is that dividends are not obligations. This means that the company may reduce or discontinue the dividends in future.

Therefore, while choose dividend stocks, you should always carefully choose those stocks which has a long history of consistent dividends. Moreover, the companies should be fundamentally strong and financially healthy. Else, if the company is not profitable in future, its dividends will also erode with time.

That’s all for this post. I hope it is useful to you. Happy Investing.