Dividend paying Maharatna stock yields 10.5% in 2022. Beats PPF, EPF, bank FD return
Dividend paying stock: It is said quite often that money is not in buying and selling of stocks but in holding it for as long as one can. According to value investors, one should invest in stocks instead of trading as its broker who makes money when you trade. A long term investor not just get return on one’s money through stock appreciation but from various other rewards that a listed company announce from its capital reserves.
Dividend payment is one such reward that a company give to its loyal shareholders. To understand how this dividend announced can go on to beat returns given by some other asset investment options, one needs to look at Power Finance Corporation or PFC shares. This Maharatna stock ended on 31st December 2021 at around ₹120 apiece levels and on last trade session of 2022, it ended at around ₹141, delivering around 17.50 per cent return to its shareholders.
However, the Maharatna stock has given stellar dividend to its shareholders as well. As per the information available on BSE website, the dividend paying stock has announced dividends on four occasions in 2022. It traded ex-dividend in February 2022 for payment of ₹6 per equity share interim dividend to its shareholders. In June 2022, it again traded ex-dividend for payment of ₹1.25 per share final dividend to its shareholders. Likewise, in September 2022, PFC shares traded ex-dividend for payment of ₹2.25 per share interim dividend to its long term investors. In November 2022, PFC stocks traded ex-dividend for fourth time in 2022 as its board of directors had declared ₹3 per equity share interim dividend to its shareholders.
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Therefore, in 2022, this Maharatna dividend paying stock delivered ₹12.50 per equity share dividend to its shareholders in 2022, delivering around 10.50 per cent dividend yield against its close price of ₹120 on 31st December 2021. Looking at the PFC share price appreciation in 2022, a shareholder got around 17.50 per cent rise in one’s absolute return as well.
Dividend yield beats PPF, EPF, bank FD return
As PPF interest rate remained 7.10 per cent throughout 2022 and EPF remained at 8.10 per cent in this time. We have taken EPF in this comparison as some people opt for Voluntary Provident Fund (VPF) to avoid income tax and get highest return available among the risk-free options.
Bank FD at the beginning of 2022 was around 5 per cent to 5.50 per cent, which surged to the tune of 7 per cent in select banks by the end of 2022. So, in short, the Maharatna stocks’ dividend yield in 2022 is much higher than these traditional risk-free options, leaving stock appreciation return aside.
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Ganesh
http://ganesh@finplay.inFinance enthusiast, Mutual fund expert.