Dividend: Before Q4 results, understand the world of dividends – where Re 1 is worth Rs 5. Note the important things for you.:Dividend: Since this is the last quarter of the last financial year, the market will keep an eye on the dividend announcements along with the March quarter results.

News Topical, Digital Desk : The fourth quarter results season has begun, and with it, a flurry of dividend announcements is expected. Indeed, with the end of the financial year, a large number of companies are expected to declare final dividends for the previous year. Companies that have already paid interim dividends for the same financial year also pay final dividends. Other companies that haven't paid any interim dividends in the previous financial year also pay dividends. This means that a significant number of companies will announce dividends along with the fourth quarter results.

Generally, dividend announcements state the amount, whether it's 1 rupee, 10 rupees, or 100 rupees. However, the amount alone can't determine whether a dividend is good or not. Dividends are paid per share, but each company's share price varies. Yield is considered for this. Simply put, it's how much dividend you receive for every 100 rupees invested in the company. This is why a 1 rupee dividend can often yield more than a 5 rupee dividend. For example, if two similar companies, each with a share price of 200 rupees and 1000 rupees, both pay a 10 rupee dividend, the first company earns 5 rupees for every 100 rupees, while the second company earns 1 rupee for every 100 rupees. This means the dividend declaration is the same, but the earnings are different. In such a situation, dividend returns vary for each individual, depending on their investment value.

What is a 200% or 500% dividend? We often hear that dividends are paid at 200%, 300%, or 1000%. Keep in mind that this only indicates the dividend paid relative to the face value. It shows how much dividend the company is paying at its own level (based on face value). However, since you buy shares at market prices, this has no bearing on the return you receive. For example, ITC's dividend rate was 1500%, even though an investor was earning a yield, or actual income, of only 3.5% on their ₹100 invested.

What is an investment strategy for dividend stocks? Dividend earnings depend on the price at which you purchased the shares. Therefore, the real benefit of dividends is realized when the shares are acquired at a lower price. This is why dividends are part of a long-term strategy. Serious investors typically compile a list of good dividend stocks and, when the right opportunity arises, purchase them gradually when the prices are at the right valuation or have fallen, reaping the dividend benefits over a long period.

How much importance should dividends give to your investment strategy? While dividends are a means of doubling earnings, focus on stock growth in your investment strategy. This is because paying dividends or not is a company's own strategy and not obligated to do so. It is not necessary that a company that is paying dividends will continue to pay dividends. Another important point is that the number of dividend-paying companies whose dividend yields for a given year can compete with fixed deposit rates is very low. Most companies' dividend yields are close to or below the inflation rate. Importantly, some companies sometimes declare dividends because their stock appears to be undervalued. In such situations, they offer dividends as an incentive to maintain investor confidence.