Dividend yield funds: Back from the dead?

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© Nikhil Walavalkar Dividend yield funds: Back from the dead?

One way some investors pick stocks is by their dividend yield. Dividend yield (D/Y) is calculated by dividing per share dividend by current market price of the stock. If the D/Y is high then the stock is said to be attractively valued. A regular-dividend paying company with reasonable earnings growth, if available at high D/Y, is an attractive investment.

Mutual funds also design schemes with high D/Y stocks. According to Value Research, over last one year ended 12 October 2021, dividend yield funds gave 63.72% returns. Dividend yield funds tend to do well when the economy is coming out of a trough in a low interest regime.

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