This is a very interesting question as stocks normally fall into Value (Dividend – Low PE) and Growth (No to Low Dividend – High PE)
Considering this, for getting regular dividends, one needs to invest in Value Stocks that fall into the falling areas of operation
- Utility – Power Companies etc.
- Mineral Extraction – Private & Public Sector Based
- FMCG – Consumer Facing
- Infrastructure – Construction, Maintenance, etc.
- Oil and Gas – Exploration, Extraction, Refining, Value Added Products
In the Indian Market, the normal dividend yield for a calendar year averages between 3–6%. At certain times (like the current one), some companies pay dividends despite making losses. In this case, the dividend yield can go up to 7–9%.
Let us take an example
In the past year, the stock of Indian Oil Corporation Ltd.(IOCL) – an oil refining major in the public sector has hardly appreciated.
Considering this, let us check what is the dividend payout between 2021–22 (Link)
Interim Dividend 1: INR 5
Interim Dividend 2: INR 4
Final Dividend: INR 2.40
Total Dividend: INR 11.40
Stock Price: INR 72 (Roughly)
Dividend Yield: ~15% (This is because the buy price depreciated)
If we consider the yield to be about 6%, then in that case,
- For a dividend of INR 50000/yr
Capital Investment = (INR 50k)/ (6%) = INR 833333
- For a dividend of INR 50000/month (Total Dividend = INR 600000/yr)
Capital Investment = (INR 600k)/ (6%) = INR 1,00,00,000 (INR 1Crore)
This is what you will have to do. While having said that, many new private sector banks are offering 5.5–7% on their savings account for amounts exceeding INR 1 Lac.
You can choose this approach and get worry-free returns.
Hope this helps
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