Dividend yield is more than just passive income: 6 PSU stocks with 4.14-5.67% yield

Stock price and dividend yields have an inverse relationship but before this inverse relationship kicks in there is a level of equilibrium. Now this level of equilibrium is a subjective level which moves according to the level of risk free interest rate which FD provides. But there is another equilibrium level which mathematical equations don't solve. As an investor one buys’ a stock with 4 percent dividend yield stocks what should be his expected return from capital gains or whether he should have it even.

After a phase of strong directional movement with a clear bullish bias, some volatility was witnessed at index level as both nifty and sensex witnessed strong moves. More importantly, it was the market breadth which was indicating that some profit booking was happening at the broader market level. One cannot rule out volatility with strong bearish bias and more damage to stock prices in the mid-cap segment. In such times, if one is taking fresh exposure to equity, ensure that there is some level of quality as far as the business and fundamentals are concerned. These selected stocks depict a strong upward trajectory in their overall average score which is based on five key pillars i.e. earnings, fundamentals, relative valuation, risk and price momentum. This implies that there has been a significant improvement in their market outlook in the given time frame.

Amongst sectors, Nifty Realty, Media, and Consumer Durables were major gainers, while Auto, Pharma, and Healthcare were major losers. Analysts see the market consolidating within the range of 18,980 to 19,220 in the near term.

For all those who are entering into stock markets at this point of time, there is one thing which they need to remember, volatility comes without any prior notice. It would be better for oneself to be prepared and one of the ways to be prepared for it is by staying with large caps at this point of time. Coming on the list is a cement major and Auto ancillary company which has recently opened two dedicated plants for supplying part of electric vehicles to OEM’s. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

After four weeks of straight up move,nifty once again witnessed volatile movement last week. In that correction, while the nifty suffered, the overall overall relative performance of the market has been better in terms of positive market breadth. From a shoe retailer which has been under pressure after covid, to a very large company to a QSR company which has seen a new generation moving into managing business, ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

One segment of the market which got another big push in the market after the election results have come has been the mid-cap segment. Both at the index land and breadth level mid-cap which were already out-performing got a push. While there is nothing wrong in being bullish given the fact that policy continuity is the next theme on the street. However, keep some check and balance while participating in this phase of the rally. The reason is the valuations are not cheap and any small profit booking correction may lead to sharp correction in individual stock prices. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.

When it came to investing on the basis of high dividend yield, it was the PSU stocks which topped the list. But then came the rally in the PSU space and it was not about dividend yield but capital gains. But the fact is that dividend yield is a cushion which will act as cushion as investors chase capital gains. A stock which is currently available at dividend yield close to 5 percent, is not bad for an investor who is keen to have some margin of safety at a time when valuations are extremely high. The reason is, when a correction takes place and the dividend yield of these particular stocks goes above 7 % there is a high probability that there would be some institutional investors who would pick it up again for dividend yield more than anything else.

On Wednesday, thanks to one stock, Reliance industry, nifty was able to make a comeback. But what is more important is that market breadth, which has been under pressure for most of the sessions for the last three weeks, was in the green territory for most of the time. It is important to keep one eye on market breadth as that would be a more reliable indicator for deciding the strength and possible time frame for which the rally may last. Another thing which one should monitor closely is when the numbers of how much money has flown to mutual funds in the month of March which would get released in early April. This would be an indication of how much impact did AMFI advisory to mutual funds had on ground. Also, this would answer the question, whether this is another short term profit booking move or a beginning of a long phase correction and valuation adjustment.During this phase, analysts are bullish on select stocks from different sectors, some of which are either the leaders of their sector or part of the top three companies which are known to be well managed. ET screener powered by Refinitiv’s Stock Report Plus lists down quality stocks with high upside potential over the next 12 months, having an average recommendation rating of “buy” or strong buy . This predefined screener is only available to ET Prime users.

The equity markets globally, both emerging and developed have moved into a correction mode. How long this correction continues is anyone's guess. In such times it would be better for both traders and investors to stay with stocks which have shown tendency to fall less in a bearish market. ET screener powered by Refinitiv’s Stock Report Plus applies different algorithms & filters to all BSE and NSE stocks, and lists stocks which fulfill the various criteria as specified into the algorithms & filters to find those which might help navigate the stock market.