High Dividend Paying Stocks

J

John4321

Adept
I would like to know from experienced ppl over here who are and currently who all are investing in stock market. I mean experienced and mid experienced ppl need your opinions. I have never invested in stock market but have heard that either it makes us rich or it makes us poor. I don't want to be both. I juz want to make sure I get a minimal income for monthly expenses to run my home and family in the long term. Currently i have heard that there are stocks which pay you dividends. I don't know how they pay, monthly, quarterly or annually. I want to know from ppl who are getting dividends since past 15-20 years or even more then that from such stocks and how much are you getting from how many stocks and also from new ppl who have invested in these stocks since past 4-5 years and how much dividend are you getting in return.

Also I want to know top 25 Indian stocks which pay you a very very good dividend.
 
1. Dividends aren't paid regularly.

2. Dividends are paid on % of face value of a share, not its market value. (Infosys has declared 210% dividend. Which comes to Rs 10.5 per share. You'll need to buy 100000 shares -@Rs 717 each at the moment- to earn dividend of Rs. 105000)

3. Adding point 1 and 2 together makes dividends as monthly pocket money an unrealistic option.
 
None of the investments makes for any pocket money be it long term or short term.
Dont spoil, waste or lose your money in something of which you got no knowledge about. Invest wisely plan accordingly. Google, study or meet experienced personals ftf for accurate guidance.
 
i have almost no experience in stocks, but i can tell you this - don't buy or sell stocks if some one tells you to. Dividends is not monthly or quarterly or yearly. It depends on profits etc. If the company gave 10 rupees dividend on 100 shares you own this year, there is no guarantee they will give similar dividend next year. Some companies have stopped paying dividends entirely after 1-2 times because they couldn't afford to. Everything depends on the balance sheet.

John4321 said:
I juz want to make sure I get a minimal income for monthly expenses to run my home and family in the long term.
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depends on how much your need per month. if typical 4 - 6 people and expenses, probably close to 25-30K per month including all bills.

To get regular monthly income, there are monthly income mutual funds and bank deposits. but to get something in 1000's a month, you will need to invest in lacs. You need to look at the interest amount first to see if monthly income makes any sense.
On Axis bank site, you get 7.3% interest pa for a deposit of Rs 1 lakh for 366 days. That's just 7320 or so rupees from 1 lakh investment per year. So you need at least 4 lakhs investment every month to get 29K per month to get to your target. That's 48 lakhs per year locked in to your bank. There may be other banks that give higher returns than this. But this is what typical interest rates look like. And this is not taking into account inflation in coming years. If your spending increases, then naturally, you need to put in more money in FD's every month depending on the interest rates. And bank interest rates are falling every year. That 7.3% pa now would be less next year.
 
Yep, doesn't make any sense to see dividends as an income source. Its an extra incentive (profit sharing) that you get for being a stock holder, but its no income source. You have no guarantees on amount of dividend or that its even paid. On a stock holding worth 3+ lac invested through out 2018, the dividends that I made last year was around Rs 3000. That's 1% value of the investment. Also, don't forget that your principal itself could grow or erode depending on the market situation.

The best and stable dividend paying companies are typically govt controlled firms like SJVN, NMDC, Oil India, Coal India, Power Finance, HPCL and the like. But don't think that you can use it as a stable income source.

SJVN which is one of the more stable dividend payers, paid total dividend of 17% on its face value of Rs 10. So, that is Rs 1.70 per share over 2018-19. The actual stock price is hovering around Rs 25 over the year. That translates to 6.8% dividend returns on actual price of the stock. In order to make an income of about Rs 20,000 per month or 2,40,000 per year you will need to invest Rs 35,30,000 and buy 1,41,200 units of this stock.
 
Okay I was watching you tube channel and came across these funds to invest which cost only Rs 100 each. So 2900 Rs for all these funds in total I can invest every month easily. But I really don't know from where and how should I start. I also have a Zerodha account not used since past 1 year after opening. One of my friend told me not to rush and start with a very very small amount and check for 6 months to 1 year how much u gain and then go on slowly slowly with a bigger amount investment. So I want to start with the minimum which is 100 bucks needed for each of these funds and it seems all of these are very popular in the market.

Reliance Mutual Fund: Reliance Vision Fund, Reliance Value Fund, Reliance Small Cap Fund, Reliance Multicap Fund, Reliance Large Cap fun, Reliance Index Fund Nifty Plan.
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ICICI Pru Mutual Fund: ICICI Bluechip Fund, ICICI Pro Value Discovery Fund, ICICI Pro Focused Equity Fund, ICICI Pro Midcap Fund, ICICI Pro Multicap Fund, ICICI Pro Large End Midcap Fund
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Aditya Birla Sunlife Mutual Fund: Aditya Birla Sunlife Equity Fund, Aditya Birla Sunlife Frontline Equity Fund
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IDFC Mutual Fund: IDFC Multicap Fund, IDFC Core Equity Fund, IDFC Nifty Fund, IDFC Focused Equity Fund, IDFC Largecap Fund

So need some guidance on how should I start by investing in all of them. 2900 Rs every month from my salary I can easily afford it. But where should I go online to start investment of 100 bucks in all of them so that automatically I have to pay 100 bucks for each of them and when my salary comes on 1st of every month then on 2nd of every month automatically 2900 Rs should get deducted for all of them in total so that I don't have to do anything
 
You are approaching this in a very wrong manner. First of all, you should do some research on how mutual funds work, categories and understand your own requirements and appetite for risk and decide which plans to invest based on that. You shouldn't invest in something without understanding what it is and how it works. Your post contains a lot of misinformation

1. Investment limits depend on the mutual fund. Some funds like liquid funds have min limit that go as low as Rs 100. but this is not the case with all funds. Many have Rs 1000 as SIP limit and some have Rs 500. Note that this is also for monthly SIP. If you want to make a lump sum investment, the limits on most funds are Rs 5000 but, some funds can have min limit of Rs 1000 and others have Rs 10000. You should avoid investing large sums at a time in equity funds. Also note that some funds do not accept lump sum investments and have only SIP option.

2. You should limit the number of funds to 5 - 8 funds max. This too only depending on how much you want to invest. If you have a small amount to invest, don't spread it thin across a bunch of funds. You definitely cannot invest Rs 2900 across 29 funds given that most funds do not even have Rs 100 as limit. If you have say Rs 4000 to invest per month, you should pick at max 2 funds and not more than that.

3. Your friend is wrong in saying that you should watch for returns in 6 months and decide. This is a mistake many first time mutual funds do after not studying what they are getting into. They put some amount, check results in 6 months or one year and if by chance that year was bad for stock market or they invested in funds that didn't do that well that year, they will pull out their funds at a loss and complain. Mutual funds are long term investments. You invest methodically for 5-10 years and get returns better than conventional instruments like Bank deposits.

What I suggest is that you first procure some working knowledge of what you are getting into before getting into it.

As for platform, zerodha has a mutual fund product called coin that is free of cost, but you should note that this holds the funds in demat form. I too have a zerodha account for stock holding and I also started out mutual funds on their own product, coin, but I have since shifted to Kuvera as my mutual fund platform. This is also a free platform, but the benefit is that any funds you open though it are held normally and hence if you ever need to, you can take your folio number and talk to the AMC directly. i.e. you are not dependent on the platform.

https://kuvera.in/
 
Yeah, don't buy ALL the funds. You can invest 2-4 mid cap and small cap funds but not in large cap as there aren't enough large cap companies to go around. Just one large cap fund is enough. Even 4 is too high a number. I'd cap myself at 3 for small cap funds and 2 mid cap funds (or not that as well, just one mid cap and one focused fund).



If you buy the market, you can't beat it.
 
Lord Nemesis said:
As for platform, zerodha has a mutual fund product called coin that is free of cost, but you should note that this holds the funds in demat form. I too have a zerodha account for stock holding and I also started out mutual funds on their own product, coin, but I have since shifted to Kuvera as my mutual fund platform. This is also a free platform, but the benefit is that any funds you open though it are held normally and hence if you ever need to, you can take your folio number and talk to the AMC directly. i.e. you are not dependent on the platform.

https://kuvera.in/
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Care to explain the bold part ?
What difference does it make to the investor? Any advantage in owning the funds normally?
 
^^ Owning direct funds instead of 'regular' funds cuts out the middleman which means that you do not have to pay anything while withdrawing, apart from taxes.

I would recommend using any of the apps like Groww, ETMoney, PayTm Money, etc. instead of going through old platforms like Zerodha. The apps are more intuitive, offer direct plans and you can check daily performance.

I personally use both Groww and PayTM money.

For what OP is asking for is a way to automatically deduct money form account for monthly investments - that can be done by setting up a mandate for SIPs in the apps.
 
^^ Both Zerodha Coin and Kuvera provide direct funds. I am not talking about that.

The main difference is that on Coin, funds are held in demat form. So you need a demat account like zerodha's to hold the funds and any additional investment in lump sum or SIP will have to be done through demat account. Basically, you are dependent on the demat account. So, if you want to stop using zerodha one day and you don't want to redeem your funds yet, you will either have to transfer your demat mutual funds to another demat account or pay fees to re materialize them into physical form. The fees for re-materialization are not trivial @ Rs 150 (+ CDSL charges) per every SIP in every fund you have ever made. If you have say 5 funds with monthly SIP done over 5 years before you want stop using zerodha, you will need to pay them 60 (SIP) x 5 (funds) x 150 = Rs 45000 and change your funds to physical form.

https://support.zerodha.com/categor...o/articles/how-to-re-materialize-mutual-funds

On Kuvera, the funds you buy will be just like when you buy them from individual AMC's, You are not dependent on Kuvera. If you want to stop using Kuvera, you can stop the SIPs setup in Kuvera and use the folio numbers to either deal with the AMC directly (including using their own portals) or migrate to another platform.

Leaving aside the demat vs non demat differences, there are several other differences between zerodha coin and kuvera.


1. Due to the way zerodha coin is integrated, the investment is always treated as lump sum on zerodha whether it is initial investment or subsequent SIP. All SIPs on zerodha are basically lumpsum which zerodha schedules for you. So, not only do you have to shell out a higher amount of Rs 5000 or Rs 10000 initially for lump sum, but also funds like Reliance Small Cap or SBI small cap that are currently not open for lump sum investment will not even be available for subscription in the web portal. When zerodha released their mobile app for coin, they rigged up a alternative solution that will allow you to subscribe to such funds from the mobile app, but even now, you cannot do this from the desktop portal. These funds are available for subscription in Kuvera. If lump sum is not available for a fund, it will just disable the lumpsum field. You can also start any fund as a SIP on kuvera.

Just to give an example of the differences, lets say you want to invest in 3 funds

MIRAE ASSET EMERGING BLUECHIP GROWTH DIRECT PLAN
HDFC SMALL CAP GROWTH DIRECT PLAN
FRANKLIN INDIA ULTRA SHORT BOND SUPER INSTITUTIONAL GROWTH DIRECT PLAN

On Zerodha desktop portal, you will not find the first fund at all since lump sum investment is not allowed for it presently. For the other two, you will need a capital of 5000 + 10000 = Rs 15000 to start investing. On Kuvera, you only need 1000 + 500 + 500 = Rs 2000 to start off with SIPs.


2. On Zerodha, there is no support for features like switching funds, STP or SWP which are available on Kuvera. Additionally, if you have MF investments done else where, you can import and manage them from Kuvera.
 
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I have used smallcase and will not recommend it. The basic problem with Smallcase is that while they usually identify the right stocks to match the theme, they don't seem to be giving any attention to the price of the stock even when they are re-balancing. They may make you buy a stock that is overpriced already and has more chance of going down in market volatility than going up. Further more, the re-balance updates come once every 3 months which doesn't make any sense in a volatile market.

If you just keep blindly accepting their re-balance updates, it might work out when the market is good, but during volatile period, you are going to get screwed royally. What was typically happening was that you would be made to buy a stock that is already high on price, then 3 months later you get a re-balance which might make you sell off that stock at a loss and buy another one in its place that is over priced which you would be made to sell again in another 3 months. In order to cut losses when the stock is no longer going to be profitable, you need to take matters into your own hands rather than waiting for smallcase to issue their re-balance 3 months later. That defeats the whole purpose and you might as well micro manage your stock portfolio.

A colleague of mine accumulated losses close to 5 lac over last couple of years by blindly relying on smallcase

If you want somebody else to manage the investment for you, stick to Mutual Funds. Also, I don't see small case as being flexible than MF. Small case is just a collection of stocks. You pay the cost of what ever stocks are part of it. For example. A Maruti Auto stock costs Rs 6700 odd currently. If you buy a small case with that stock, you need to spend that amount. On the other hand, you can start investing in a mutual fund with Maruti Auto and many other stocks with just a SIP of Rs 500 or 1000. The AMC invests your money in numerous number of stocks or bonds and everyone who invested in that funds gets to share the returns from the collective investment.
 
@Mr.J covered lot of ground in his post on dividends. There is a small thing which I wanted to add - Unlike what people think dividends are not investor friendly. It was at one point of time but nowadays lot of companies give dividends because they get tagged as hoarders if they don't. This has lead to bad incentives where companies nowadays take on debt just to pay dividends. Normally, companies with good management have better use of that money and that use is to re-invest and grow a business. If they can't find avenues to grow, by all means pay a dividend.

As for MFs, I think the simplest idea is to just find an index fund. Large cap, mid cap, small cap, equity, growth, debt funds etc. rely a lot on fund manager's stock picks. Just look at what has happened to debt funds, they showed no loss in NAV even though the underlying borrowing had defaulted. But, if you can find a good manager and trust him long term then go for it, else stick to true passive investing via index funds.
 
Lord Nemesis said:
I have used smallcase and will not recommend it. The basic problem with Smallcase is that while they usually identify the right stocks to match the theme, they don't seem to be giving any attention to the price of the stock even when they are re-balancing. They may make you buy a stock that is overpriced already and has more chance of going down in market volatility than going up. Further more, the re-balance updates come once every 3 months which doesn't make any sense in a volatile market.

If you just keep blindly accepting their re-balance updates, it might work out when the market is good, but during volatile period, you are going to get screwed royally. What was typically happening was that you would be made to buy a stock that is already high on price, then 3 months later you get a re-balance which might make you sell off that stock at a loss and buy another one in its place that is over priced which you would be made to sell again in another 3 months. In order to cut losses when the stock is no longer going to be profitable, you need to take matters into your own hands rather than waiting for smallcase to issue their re-balance 3 months later. That defeats the whole purpose and you might as well micro manage your stock portfolio.

A colleague of mine accumulated losses close to 5 lac over last couple of years by blindly relying on smallcase

If you want somebody else to manage the investment for you, stick to Mutual Funds. Also, I don't see small case as being flexible than MF. Small case is just a collection of stocks. You pay the cost of what ever stocks are part of it. For example. A Maruti Auto stock costs Rs 6700 odd currently. If you buy a small case with that stock, you need to spend that amount. On the other hand, you can start investing in a mutual fund with Maruti Auto and many other stocks with just a SIP of Rs 500 or 1000. The AMC invests your money in numerous number of stocks or bonds and everyone who invested in that funds gets to share the returns from the collective investment.
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Thank you that was quite informative about smallcase. A friend and I, had a similar idea back in 2014 but after thinking it through we decided against it. We couldn't bring ourselves to launch a product which worked by making people their money. The issue was not re-balancing but a mix of incentives, thematic investing and people.

First the incentive, In a business like this is make people trade more. They trade more, you make more money through brokerage commissions. So, I think less than 3 months rebalance is a bad idea. It should rather be more but then smallcase will not make more money.

Second issue is with thematic investing. For example, I can see a theme about "affordable housing" companies on their homepage. Now if this theme is good and well-liked, then as you said correctly, these companies are going to be overpriced. The only way to avoid this is to chose a good and stable theme.

**rant - unrelated to smallcase
Which brings me to the people issue . People have difficulty sticking to anything long term, especially when it comes to money. Look at MF. It is said that no one ever has the same returns as the fund. The reason is people withdraw money when prices are low and pile in more money because the price are high (for example x fund returned 20% last return they will pile money while 1% will get zero). So, we found that people tend to pile on the most recent super-duper hi-fi theme and suppressing their own returns. If we tried to hide that way, we were accused of hiding the best ideas etc.
 
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