Most dividend investors make the same mistake: they buy the highest yield and ignore growth.
I analyzed 10 Indian stocks that combine meaningful dividends with long-term compounding potential.
Which dividend stock would you add to this list?
10 years ago:
1. We did not pay GST
2. Insurance maturity amounts were tax free
3. There was no LTCG tax on stocks and equity funds
4. There was no TCS of 20% on remittances
5. We had indexation to adjust for inflation when buying debt funds and gold
6. Real estate was indexed.
I spent over a month in the United Kingdom and I cannot emphasize how protected India has been from inflation and unemployment, on a comparative basis of course. Basically, my takeaway was - other than clean air and good weather, there's nothing left to go to the UK for.
I do consulting for Rs. 12,200/-
You pay Rs. 2,196 in GST.
I get Rs. 10,004/-
I pay Income tax of Rs. 3,202 @ 32%.
I am left with Rs. 6,804/-
Now I pay a bill of Rs. 5766 with 18% GST.
Rs. 5766+1037= Rs. 6,804/-
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I need to charge Rs. 12,200 to pay a bill of Rs. 5766 and in
17 years ago, my professor at NYU told me 'In Bear Market, Big falls happen on Mondays. In Bull Markets, Biggest rallies happen on Fridays'. Took me 17 years.
You have to give it to Mr Modi for one thing
- after implementing GST on everything,
- introducing 10% LTCG on capital gains,
- completely removing LTCG and indexation on debt funds,
- imposing 20% TCS on foreign remittance; and
- after imposing tax on insurance
What Uday Kotak recently said highlights a very dangerous trend - This Bull market has been so long that many wealthy kids started managing family wealth as a full time business. While you can make money from money, this is not a rewarding career. You actually do nothing!!
HDFC is trading at the cheapest it has been since 2005, barring for a few days after the COVID crash. Would you believe it! ....... and no one is buying it!!!! This is price action.
If you belong to the 2.2 % population of India i.e. or 3.12 crore Indians who pay income tax, then here's something to be proud of - you sponsor that free ration for 83 crore Indians.
We are holding 16,22,000 shares of SJVN at Rs. 28. Annual dividend is Rs. 27,57,000. Why will I ever sell this? I have an incentive to invest the dividend in another stock with a high DPR.