Dividend Yield + Growth

Prathmesh Kamath | June 7, 2021


Strategy: Dividend Yield + Growth, Top 500 Stocks 

Portfolio Rebalancing Frequency: Monthly, Cost:

Sectors: Automobile, Chemicals, Diversified, FMCG, Healthcare, Technology, Textiles 

About the Strategy: 

In this report I will be explaining the Methodology and reasons behind the strategy selection,  in order to maximize the portfolio returns and have fundamentally realistic approach one can  initiate the growth investing and Dividend yield strategy, Why growth? As we all have access  to the Fundamentals of the company, we can further make ratio analysis and determine key  

growth parameters which will drive the growth of sector as well as different stocks. 

Another combination to merge with growth strategy is the dividend yield as those company  which pays the dividend or have high dividend pay out ratio usually have relation with the  growth, the investor can analyse historical dividend payments and be assured of a least  amount of return as the dividend will be paid to them which will be a tax exempt. By using  such combination of Growth and Dividend the investors are fundamentally assured that the  returns generated on the portfolio will be good to the greater extent.

Growth Investing Strategy: 

In order to excel in this strategy, the investor must know which industry is currently trending  towards growth, as the more the demand for the sector the overall momentum for the growth  will be intact. Here are the sectors which is currently in their growth cycle. 

Automobile Sector: Transition from traditional petrol and diesel vehicles to Electric Vehicles  will drive growth in auto stocks thus opportunity is visible. 

Chemicals Sector: Demand for Speciality chemicals has risen and technology  advancements would require customised chemicals leading to growth in this sector. 

Technology Sector: has good growth potential as due to increase in Internet of Things and  Blockchain tech demand from the global arena the technology sector is poised for growth. 

Healthcare Sector: The current pandemic and increase in healthcare initiatives will drive  the growth in this sector. 

Dividend Yield Strategy: 

The Rationale is companies who tend to generate good amount of profits have good cash  reserves and such companies rewards its investors with healthy dividend Payout, as we  know different companies have different policy towards dividend pay-out, but by identifying  historical dividend pay-out trends the investor gets to know the approximate amount of  dividend they will be receiving in the future. Thus, this ensures there will be some return on  portfolio other than capital appreciation. 

Conclusion of the Strategy: 

Stocks with a history of dividend growth, on the other hand, could present a compelling  investment opportunity in an uncertain environment. An allocation to companies that have  sustainable and growing dividends may provide exposure to high-quality stocks and greater  income over time, therefore buffering against market volatility and addressing the risk of  rising rates to some extent. Dividend growth stocks tend to be of higher quality than those of  the broader market in terms of earnings quality and leverage. Quite simply, when a company  is reliably able to boost its dividend for years or even decades, this may suggest it has a  certain amount of financial strength and discipline. 

Thus, this indicates the Growth is interrelated with the dividend and becomes a powerful  return generating strategy for overall portfolio development.

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