It's commonly believed that making money involves holding onto stocks for as long as possible rather than buying and selling them. Value investors contend that rather of trading, which benefits your broker, you should invest in companies. In addition to receiving a return on their investment through stock appreciation, long-term investors may also receive other benefits from capital reserves announced by listed companies.
One such reward given by a corporation to its devoted shareholders is a dividend payment. One needs to look at Power Finance Corporation or PFC shares to comprehend how the dividend that was announced can continue to outperform returns provided by some other asset investment possibilities. This Maharatna stock finished on December 31, 2021, at around 120 per share, and on the final trading day of 2022, it concluded at about 141, giving its stockholders a return of about 17.50%.
However, the Maharatna stock has also paid outstanding dividends to its investors. According to data on the BSE website, the dividend-paying stock has declared dividends four times in 2022. It went ex-dividend in February 2022 and received an interim dividend payout of 6 per equity share.
As a result, this Maharatna dividend-paying stock distributed a 12.50 per equity share dividend to its stockholders in 2022, yielding a dividend of about 10.50% compared to its closure price of 120 on December 31, 2021. A shareholder's absolute return increased by almost 17.50% in 2022, when taking the PFC share price increase into account.
Dividend yield outperforms bank FD, PPF, and EPF returns.
EPF's interest rate remained at 8.10% during this time, whereas PPF's rate stayed at 7.10%. We included EPF in this comparison because some people choose Voluntary Provident Funds (VPF) in order to avoid income tax and receive the maximum return possible among risk-free investments.
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