High dividend stocks for risk-averse investors
be ideally divided equally amongst all 10 stocks that have been picked. Investors can hold on to the stocks for a little more than a year and then re-examine and replace their picks. The strategy has to be repeated for a couple of years at least to get the best returns, as over time the Dogs of the Dow have outperformed even the DJIA.
The Dogs of the Index strategy for investments in equity is also, though not very often, used in India, using the benchmark 30-share sensitive Bombay Stock Exchange Sensex, the BSE 100 or even the National Stock Exchange Nifty Fifty. Apart from this, there are also other options such as dividend yield mutual funds, where investors can limit their direct exposure to such stocks or not even have to put in long hours in choosing these stocks and are still assured of a stable flow of income.
Analysts believe that this can be a good choice for risk-averse investors but must be used on a case-to-case basis. “Companies with strong cash-flows and well-entrenched business models are usually those that have a good dividend track record and strong cash balances. Besides, companies that have managed their cash flows well even in a market slowdown might be the ones to watch out for. Investors can start by looking at dividend-yield stocks that provide an excellent alternative to debt instruments,” said Mayuresh Joshi, vice-president (institution) at Angel Broking.
While warning that investors needs to be careful while selecting high dividend
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