Dividend Yields Back In Focus

Sales is vanity, profit is sanity & cash is reality." - Anonymous

The quote has been a backdrop of the dividend yield theme. Investing for dividends is a philosophy in itself. Lot of us believe that to make money in stock markets one should invest in great businesses with equally great management. The rationale behind great management is prudent use of capital . We all focus on profits and growth in profits of a company while very little time is spent on finding how much cash is generated out of profits and what the end use of this cash is.

Mutual funds in India started launching dividend yield funds in 2003. They didn't get enough recognition from 2003-2007 when capital cost was going down and GDP growth soaring. Since 2008, the dividend yield theme has started getting focus. Such funds have delivered positive returns since the peak of 2008 while the index has gone down by over 25% in the same period.

Source: Times Of India

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