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Dividend Investing Strategies || Easily Earn Dividend Income || Stock Market for beginners - YouTube
Channel: smallcase
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Today's video is about
dividend investing strategies.
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And we will tell you that
if you want to earn dividend income,
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then what is the best means or method
to do that.
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But before telling about it,
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I would like to tell you that
if you don't know much about dividends,
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and if you want to learn
what dividends are,
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and why to invest for dividends,
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then do watch our other video
which explains about dividends
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and why mutual fund dividends
are not actually dividends.
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If you are new to dividend investing
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and you don't know much about dividends,
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then do watch that video
before watching this video.
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Because this video will focus only on
the dividend investing strategies.
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As I said, the dividend investing strategy
is a very established strategy
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that is followed by many people
around the world
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to earn dividend income.
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It is very popular.
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And there are many people in India
that I know, and you may know some too
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who really focus on dividend income.
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If you are one of those investors,
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then you must already know
that, generally speaking,
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the most popular method is that
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you find dividend-paying stocks
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that have high dividend payout
or the high dividend yield
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or have increased dividends
to a great extent.
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There are many types of data points
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that needs to be researched to
identify those stocks
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so that you can earn
good dividend income from them.
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But not everybody can do that.
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It is not easy to do that
because you have to use many filters,
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and various ways to screen stocks.
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And you have to ensure that you are
ultimately investing in those stocks
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that not only pay dividends,
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but are actually good companies
in which you would like to invest.
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Many companies pay a lot of dividends
and have a high dividend yield,
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but they are not necessarily
good companies.
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So if you invest in stocks on your own,
like many people do,
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they will tell you that
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you need to obtain a lot of knowledge
before taking these decisions
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or spend a lot of time
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to learn and execute all these things.
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So this is obviously the most
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common method tried by people till now
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to invest in these types of stocks.
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But as many people know and are using,
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smallcase is a quite simple method
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to invest in
the dividend investing strategies.
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So today we will talk about
a few such smallcases.
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But before going into their details,
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let's have a quick look at
what a smallcase is.
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Smallcase is a basket of stocks or ETFs
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having an investment strategy or a theme.
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Theme can be, like electric cars,
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or a government policy, like GST
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which is beneficial to many comapnies.
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So there can be a portfolio
based on that theme.
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Or as I said, investment startegies,
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like value investing is
an establihsed strategy
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that was invented by Benjamin Graham
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and popularised by Warren Buffet.
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Similarly, dividend investing is also
an established strategy,
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and there are many smallcases based on it.
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And today that's what we will talk about.
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So, friends, let's talk about
the first smallcase that is
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Dividend Aristocrats Smallcase.
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This smallcase is a portfolio of
those companies
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that has consistantly increased
their dividend payout
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and has increased it
over the past 10 years.
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It is important because
when a company announces dividend,
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it gives a strong signal to
the entire market and all the investors
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that their business is doing well,
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and they have so much profits that
they won't only expand their business,
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but can also return some money
to their investors.
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But when a company increases
its dividend payout,
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it gives a powerful signal to the market
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that it is not just doing well,
it is doing so good that
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it is paying higher dividend to
its shareholders this time.
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So it makes a positive market sentiment.
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In fact, sometimes when a company
decreases deividend
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it make a negative sentiment
for the company
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as to why it is decreasing the dividend,
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is there any problem
and the comapny is not going well.
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All companies and market participants know
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that decreasing dividend gives
such a negative signal to the market.
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Therefore, the dividend-paying companies
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are very careful and considerate
in increasing their dividends
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because they know that
they can incease it,
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but it will be very difficult to
decrease it in future.
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So they increase their dividends
only when they are fully confident
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that they can maintain it in future.
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So when you find companies like these
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that are increasing their dividends,
maintaining it,
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and are continuously
increasing it further,
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it is a powerful and healthy signal
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and is a great strategy
for dividend investing.
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Based on this philosophy, idea,
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we have created
Dividend Aristoctars Smallcase.
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And to create it,
we scanned the whole NSE universe
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and selected those stocks
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that has been consistantly increasing
their dividend payout
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for the last 10 years.
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As you can see, this portfolio includes
stocks like Bajaj Finance, HDFC Bank
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that have good track record
of dividend payouts.
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Now let's talk about our
second dividend investing strategy.
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This smallcase is called Dividend Stars.
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Dividend Stars Smallcase is
a portfolio of stocks
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of the companies having
high dividend yield
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and who have never decreased
their dividend amount.
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So, I have explained earlier in this video
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what is the importance of
not decreasing the dividends
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and what are its benefits
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and why is it important
from the viewpoint of investing.
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The Dividend Stars Smallcase
combines two things.
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First is the dividend yield.
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As you may already know,
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Dividend yield is very simple
to calculate.
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It is calculated by dividing
the dividend to
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the stock price of the company.
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Let say, if the current share price
of a company is 100 rupees,
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and they issue a dividend of 5 rupees,
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then the dividend yield of the company
is 5%.
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A very simple calculation.
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It is important because
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when people see the dividend yield,
they can understand that
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if they invest an amount,
let's say 100 rupees,
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how much amount
they will get back as dividend.
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Always remember,
when you calculate dividend yield,
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it is based on your purchase price.
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Suppose you buy that stock for 100 rupees
and get a dividend of 5 rupees.
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After 2 years, the price of the stock
of the company
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rises from 100 to 200
and the dividend rises from 5 to 10.
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Now, the calculation of the dividend yield
after 2 years
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will be 10/100, and not 10/200.
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Thus, your original dividend yield
will rise from 5% to 10%.
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Always remember,
the dividend yield is always calculated
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on the basis of your purchase price
if you have already bought the stock.
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And if you are about to buy it,
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calculation will be based on
current purchase price.
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So, the first point was
the high dividend yield.
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And as I said earlier,
second point is that
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these companies have never
decreased their dividend amount.
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So keeping in mind these two points,
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we have designed this smallcase.
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And this smallcase has companies
like Tata Chemicals,
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PTC India, Barmen Lawrie,
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that have high dividend yield,
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and have never decreased
their dividend amount.
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That's why the dividend yield of
this smallcase is about 2.4-2.5%.
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And it is almost double,
in fact, it is more than double
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the dividend yield of NIFTY
which is currently around 1.2%.
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So the two strategies we just discussed
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focus only on the dividends.
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But apart from these two smallcases,
we have created two more smallcases
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that focus on some fundamental criterias
along with the dividend.
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Let's take a look at them.
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Straight flush Smallcase focus on
those companies
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that pay dividends as well as
are low volatile and less risky.
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And Analysts have recently issued
earnings upgrade in them.
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So, they pay dividends.
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And Analysts have also upgraded them
in their recommendations.
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Also, their volatility level is quite low.
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They are much less risky
compared to other stocks.
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That was Straight Flush Smallcase.
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Dividend Smart Beta Smallcase
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combines dividend investing startegy
and Smart Beta investing startegy.
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And you may have heard,
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this strategy has gained popularity
in foreign countries.
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And it has been recently
launched in India,
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and many people are implementing it now.
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So it combines dividend and Smart Beta.
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This smallcase focus more on
large cap stocks.
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We work out how to identify and select
the smallcase that is right for you.
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To do this, first,
you will have to visit smallcase.com.
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And when you go to
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the discover section there,
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you can use the filters or the search box
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and can see different smallcases,
including those five
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I have told you about today.
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Suppose you liked
Dividend Aristocrats Smallcase,
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and want to know more about it.
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When you click on it,
you will be directed to its page,
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and you will see
different types of details,
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like the risk involved in it, its CAGR,
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its current and historical performance.
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You can also easily read the rationale
that I have explained in this video
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and can learn about
the methodology in detail.
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You can find all the information
about not only this smallcase
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but all the smallcases on our platform.
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But if you want to know
what is right for you,
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which smallcase you should invest in,
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then you should first ask yourself
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why you are following
the dividend investing strategies.
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Is your goal is to earn dividend income?
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Then maybe you should
focus on the smallcases
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that have high dividend income
or dividend yield.
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Or is dividend a criterion
in your stock selection,
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while your goal is to invest in
good healthy companies?
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And as I said,
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if that is your objective,
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you can invest in different smallcases
that I have explained to you,
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like Clash of the Titans,
Straight Flush, etc
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based on your objective.
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Another factor is risk.
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You also have to consider
how much risk you want to take.
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Some smallcases,
like I said Dividend Smart Beta,
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focus on large cap stocks.
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It naturally carries low risk.
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Some smallcases are mixed.
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They have small cap, mid cap,
as well as large cap stocks.
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So their risk level can range from
moderate to high.
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So keeping in mind all these factors,
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you can easily choose the smallcase
that is right for you
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at our platform,
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and then you can easily invest in it.
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Thus, you can actualize
your dividend investing strategy.
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So, friends, I hope you have learned
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a lot of things about dividends
and dividend investing startegies.
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If you liked this video,
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then do like, share and subscribe.
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And if you have any doubts or questions
regarding dividends,
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tell us about it in the comment section
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or you can email us at
[email protected].
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