ALL >> Education >> View Article
Dividend Yield Funds: Investing Strategies

What kind of an investment strategy do Dividend Yield schemes follow?
Dividend yield schemes offer limited protection in falling market scenarios as such dividend paying stocks usually do not fall as much as the broader market. These schemes focus on the cash generated by the companies in which they invest business and this provides for stable returns even in volatile market conditions.
The dividend yield on a stock is inversely related to its price – that is, when the dividend yield (pay out) is high the lower is the price of the stock and the other way round. When the market goes up and stock prices are high, the dividend yield falls. On the other side, when markets are falling and stock prices are low, dividend yields rise. In either case, fund managers manage to make profits – in the first case from high prices and in the second case from higher yields.
Fund managers of such schemes prefer to invest in stocks with higher dividend yields, which are more attractive and generate stable dividend income during bear markets. There is a built-in self-correcting mechanism for dividend ...
... yield stocks and this balances the assets, enabling such schemes to generate stable returns.
Fund manager also pick stocks that apart from paying regular dividends have potential for capital appreciation. Therefore, one can expect to earn a decent recurring income and record capital gains over time.
How much dividend has to be paid out by a company depends on its earnings as well the outlook for the company, industry sector and the economy in general. A part of the profits of any company is ploughed back into the business and if there is any surplus that will be distributed to shareholders.
Usually a high growth will not be able to pay good dividends because it will be using all available resources to grow the business. On the other hand, a company that has a stable business and is growing at an above average rate would probably pay a good dividend.
In a nutshell, dividend yield stocks provide a cushion in the form of a stable dividend income during bear phases, while they generate capital appreciation during bull phases. Therefore, investors with any kind of risk appetite can consider investing in these schemes.
Add Comment
Education Articles
1. The Best Sap Ariba Training Course In Hyderabad | Sap Ariba Online TrainingAuthor: krishna
2. Advance Your Career With A Level 3 Business Administration Qualification
Author: jann
3. List Of Top Online Ba University In India
Author: Studyjagat
4. Patient Manual Handling Course In Dublin: Essential Training For Healthcare Professionals
Author: johnymusks
5. Why Raj Vedanta Is The Best Icse School In Bhopal
Author: Ronit Sharma
6. Devops Training In Bangalore | Aws Devops Training Online
Author: visualpath
7. Unqork Online Training Institute | Unqork Training
Author: visualpath
8. Best Gcp Data Engineering Training | Google Cloud
Author: Visualpath
9. Salesforce Devops Course | Salesforce Devops Training
Author: himaram
10. How To Master Electrical And Mechanical Concepts For Rrb Alp Exam?
Author: Easy Quizzz
11. Generative Ai Courses Online | Genai Online Training
Author: Susheel
12. Oracle Cloud Infrastructure Online Training Institute | Visualpath
Author: visualpath
13. Aws Ai Certification | Ai With Aws Online Training India
Author: naveen
14. Why Do Students Struggle With Their Final Year Projects And How Can They Get Help?
Author: Paul J. Winters
15. Unlock Professional Growth With Leed Ap Certification
Author: Passyourcert