Ah, the allure of dividends – the sweet siren song for many an investor. Wanting a monthly stream of 8-10 lakhs through dividends feels like searching for a serene oasis in the vast financial desert. But before we embark on this journey, let’s adjust our compass slightly.
Understanding Dividends: Dividends are portions of a company’s earnings shared with shareholders. Often perceived as a steady income, they, however, are not always a mirror reflection of a company’s health or future prospects. Relying solely on dividends might lead you to miss the bigger picture.
The True Dividend Yield: In the Indian market scenario, a standard dividend yield revolves around 1% to 1.5%. So, aiming for INR 8-10 lakhs monthly, which is 96-120 lakhs annually, you’re looking at an investment ballpark of INR 64-120 crores, given the prevailing yields.
Chasing Dividends Vs. Overall Growth: It’s crucial to understand that a singular focus on dividends can be limiting. Like wanting only the fruits from a tree, but not the shade. Capital appreciation is the tree’s growth, benefiting you in the long run. Using the Roots & Wings approach, focus on ‘Roots’ for stocks with strong fundamentals. While these ensure stable dividends, the ‘Wings’ will ensure your portfolio soars with growth over time.
LSG Framework: The Liquidity, Safety, and Growth (LSG) model is your trusty camel in this desert journey. While hunting for dividend-yielding stocks, ensure a portion remains liquid for unforeseen needs and allocate another segment towards growth assets for capital appreciation.
Re-evaluate and Consult: Markets, like desert sands, shift continually. Regular portfolio check-ins are imperative. As Warren Buffett said, “Do not take yearly results too seriously. Instead, focus on four or five-year averages.” When in doubt, lean on a SEBI Registered Investment advisor. And, for bespoke advice, Jama Wealth’s expert investment advisory and PMS is a compass you can trust.
To sum up, while dividends can quench immediate thirst, it’s the combined elixir of dividends and capital appreciation that ensures long-term financial well-being.
