Dividend play

As the outlook for the stock market turns hazy, investors' focus is expected to shift to companies which pay higher dividends. Analysts say this is because expectations on capital appreciation in stocks wane in uncertain market conditions. Investing in stocks with higher dividends has been a conventional way of stock market investments and is a widely followed practice in developed markets. But, in India, the investment philosophy is heavily biased towards capital appreciation. The absolute dividend yield on stocks can be a compelling metric for spotting opportunities. A rule of thumb is that a dividend yield of five per cent and above are good opportunities. Also, the record of dividend payment and companies' cash flow are closely watched by veteran investors along with dividend yield. (Click on graphics)