How much would I have to invest to get a monthly dividend of 50,000 rupees?

This is a very interesting question as stocks normally fall into Value (Dividend – Low PE) and Growth (No to Low Dividend – High PE)

Stock Investing: Value v/s Growth

Considering this, for getting regular dividends, one needs to invest in Value Stocks that fall into the falling areas of operation

  1. Utility – Power Companies etc.
  2. Mineral Extraction – Private & Public Sector Based
  3. FMCG – Consumer Facing
  4. Infrastructure – Construction, Maintenance, etc.
  5. 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%.

Concept of Dividend Payment

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.

Performance of IOCL Stock in the past year

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

You can follow my blog or Facebook page on investing for getting insight into other stocks.

Happy Investing!!

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