Hello friends Raunak here again. In the last post I spoke about how the beginners can trade in market by mutual funds. Now let us speak about how to buy a dividend paying company. Now you may wonder why dividend paying stocks. Because the greatest investor of all time'Warren Buffett' invests in the same way and also it serves as a way of earning passive income.
Before I begin let me tell you this is a long blog and worth reading.
So now let me tell you how I select dividend paying stocks. I cannot give definitions of ratios that I use so I recommend you do some research about them.
Selecting stocks with
1) Highest Dividend Yield.
2) See Debt to Equity Ratio if it is greater than 1
then see interest coverage ratio it should be greater than 5
3) See ROE it should be at least 20% average of last 5 years.
if it is less than 20% then company should have a high payout ratio.
Now you will ask that's all right Raunak where can I find this data. You can find all these ratios calculated on the website moneycontrol.com the details of dividend yield is given in quote itself. But for other ratios you need to go to vertical tab
select >financial> ratios.
Thanks for reading it really means a lot to me.
If you like this blog please give a like and comment all your queries I will answer them .
Meric
