Selecting Growth Or Dividend Stocks

When it comes to stock investing, the divide between the growth and dividend strategies is not so cut and dry as it is in mutual funds. Broadly speaking, growth investing focuses on stocks that are expected to grow fast in the coming years, irrespective of the dividend payout. Growth stocks are characterised by high ratios—earnings growth, return on equity, return on assets, etc.

With the broader market remaining almost flat for the past five years, retail investors are finding it tough to generate decent returns from the stock market. Nevertheless, the expert stock pickers were able to generate good returns by shifting from high beta sectors to the defensive sectors. This 'hiding behind the defensives' strategy has also become risky now. Most of the stocks from defensive sectors like FMCG and pharma are quoting at lofty valuations.

Source: Economic Times

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