Posts Tagged ‘capital appreciation’

Dividend Payout not the Best Criteria to Judge MFs Schemes

Dividend Payout not the Best Criteria to Judge MFs Schemes

Dividend Payout not the Best Criteria to Judge MFs Schemes

 

Mutual fund schemes generally boast about high dividends but mutual fund experts say picking a mutual fund scheme on the basis of its dividend payout may not be the best way to invest in the sector.

As per MF experts, comparing the quantum of dividends paid in short term is not the correct way to measure a fund’s performance.

The proportion of dividend depends on a number of factors, including the frequency of payouts over a certain period of time.

There are funds that have higher net asset value (NAVs) but lower dividends, while others have lower NAVs, higher dividends.

Moreover, many analysts believes that the consistency of dividend payout is important than the quantum of dividend.

Experts always insist investors to not to base their investment decision on the percentage of dividend paid in a short period.

Rather Investors should look for the track record of the fund in this regard over a longer period of time.

After the recent equity market bull-run, many equity funds have declared dividends up to 70 per cent.

So far in October, over a dozen of equity schemes have declared dividends.

Experts are of view that the quantum of dividend paid does not directly indicate the performance of the fund, especially in the short term.

Unlike equities, if a mutual fund scheme pays certain percentage of dividend, NAV of the scheme drops by the same proportion.
If investors go for dividend plans, they most probably miss the compounding opportunities over the long-term for short-term gains.

An Equity head of a mutual fund said “unlike debt funds, where the intention of an investor is to earn dividends on a regular basis, investors in equity funds,  do not always look for dividend”.

At times, the focus is more on capital appreciation.

Even Fund Managers of reputed firms have maintained quite often that they pay dividends every year irrespective of the market conditions and consistency have always been theirs primary concern not the quantum of dividend.

High Dividends !! Not the Best Way to Judge MF Schemes :)

High Dividends !! Not the Best Way to Judge MF Schemes

High Dividends !! Not the Best Way to Judge MF Schemes


Mutual fund schemes
generally boast about high dividends but mutual fund experts say picking a mutual fund scheme on the basis of its dividend payout may not be the best way to invest in the sector.

🙂

As per MF experts, comparing the quantum of dividends paid in short term is not the correct way to measure a fund’s performance.

The proportion of dividend depends on a number of factors, including the frequency of payouts over a certain period of time.

There are funds that have higher net asset value (NAVs) but lower dividends, while others have lower NAVs, higher dividends.

🙂

Moreover, many analysts believes that the consistency of dividend payout is important than the quantum of dividend.

Experts always insist investors to not to base their investment decision on the percentage of dividend paid in a short period.

Rather Investors should look for the track record of the fund in this regard over a longer period of time.

🙂

After the recent equity market bull-run, many equity funds have declared dividends up to 70 per cent.

So far in October, over a dozen of equity schemes have declared dividends.

Experts are of view that the quantum of dividend paid does not directly indicate the performance of the fund, especially in the short term.

Unlike equities, if a mutual fund scheme pays certain percentage of dividend, NAV of the scheme drops by the same proportion.
If investors go for dividend plans, they most probably miss the compounding opportunities over the long-term for short-term gains.
🙂

An Equity head of a mutual fund said “unlike debt funds, where the intention of an investor is to earn dividends on a regular basis, investors in equity funds,  do not always look for dividend”.

At times, the focus is more on capital appreciation.

Even Fund Managers of reputed firms have maintained quite often that they pay dividends every year irrespective of the market conditions and consistency have always been theirs primary concern not the quantum of dividend.

🙂

Know how to make money in shares!!!

Make Money By shares

Everyone wants a piece of the stock market. And why not?

But do you know how shares reward an investor?

If you are a shareholder, there are two ways you can benefit from the profits of a company: capital appreciation or dividend.

Read on to understand how shares reward you. 🙂

Dividends, dividends!

Usually, a company distributes part of the profit it earns as dividend.

Say a company earned a profit of Rs 1 crore (Rs 10 million) in 2004-05.

It keeps half that amount within the company.

🙂

This is used for a variety of purposes — buying more machinery, land or raw materials, building a new factory or setting up a new office. It could even be used to repay loans.

The other half is to be distributed as dividend. 🙂

Assume the company has 10,000 shares.

This would mean half the profit — ie Rs 50 lakh (Rs 5 million) — would be divided by 10,000 shares.

So each share would earn Rs 500. The dividend would then be Rs 500 per share.

🙂

If you own 100 shares of the company, you get a cheque of Rs 50,000 (100 shares x Rs 500) from the company.

🙂


Everyone wants a piece of the stock market. And why not?

But do you know how shares reward an investor?

If you are a shareholder, there are two ways you can benefit from the profits of a company: capital appreciation or dividend.

Read on to understand how shares reward you.

Dividends, dividends!

Usually, a company distributes part of the profit it earns as dividend.

Say a company earned a profit of Rs 1 crore (Rs 10 million) in 2004-05.

It keeps half that amount within the company. This is used for a variety of purposes — buying more machinery, land or raw materials, building a new factory or setting up a new office. It could even be used to repay loans.

The other half is to be distributed as dividend.

Assume the company has 10,000 shares. This would mean half the profit — ie Rs 50 lakh (Rs 5 million) — would be divided by 10,000 shares.

So each share would earn Rs 500. The dividend would then be Rs 500 per share.

If you own 100 shares of the company, you get a cheque of Rs 50,000 (100 shares x Rs 500) from the company.