What is Dividend Stocks: Definition & Meaning Explained

Definition of Dividend Stocks

Dividend stocks are shares of companies that redistribute their profits to shareholders in the form of dividends. Such companies are typically industry or sector leaders with stellar reputations and track records.

How much dividend a company offers can be calculated with the dividend yield ratio or dividend per share.

Investors prefer to buy dividend stocks because they can either reinvest the dividends to buy more shares or earn passive income. Examples of dividend stocks in India include:

Coal India
Indian Oil Corporation (IOC)
ONGC
SAIL
Tata Steel

Anchoring and Adjustment

Anchoring is a bias that drives people to make decisions that are based on (anchored to) pre-existing notions, ideas, and suggestions that may or may not be true.

Adjustments around anchoring are common as it becomes a starting point for many when it comes to decision-making.

For example, someone is anchored to a financial model or strategy. They may choose to use the anchor in situations where it may not fit and as a result, may end up getting an unfavorable outcome.

Basing

Basing happens when a security trades sideways after prolonged periods of falling prices.

As a result, the security forms a “base” or flat pattern which means there is little to no upward or downward movement and a decline in volatility.

This may go on for a relatively long time but is crucial as basing is an indicator of any meaningful reversal that may happen.

Comparable Company Analysis

Comparable Company Analysis (CCA) is a method used to evaluate a company’s value by comparing its essential metrics like EBIT, EBITA, and more with other companies.

The underlying assumption of CCA or “Comps” is that publicly traded companies from the same sector or industry will have similar metrics that are comparable.

Beta Stocks

Beta of stocks measures the risk that the shares carry compared to the broader market. Theoretically, the market is said to have a default Beta of 1. As a result, Beta stocks can be of four types:

High Beta Stocks : typically having a Beta value of more than 1, these stocks are known to be high-risk, high-reward investments
Low Beta Stocks : typically having a Beta value of less than 1, these stocks are known to be low-risk, low-reward investments
Negative Beta Stocks : typically having a Beta value of less than zero, these stocks are known to have an inverse correlation with the market
Same as the market : typically having a Beta that’s equal to 1, these stocks are known to share characteristics with the market

Lump Sum

Lump sum refers to a one-time, single payment made in a single installment, as opposed to a series of smaller periodic payments. It commonly refers to a large sum of money paid at once, like a mutual fund investment or a share market investment, rather than spread out over multiple payments like SIPs.

*All securities mentioned on this website are exemplary and not recommendatory.

We are bullish on India, we are bullish on India's prospects to be one of the largest economies in the world. We believe that the stock market provides a unique opportunity for all of India's traders and investors to participate in the growth story of the country.

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Dividend Stocks

Dividend Stocks

Definition of Dividend Stocks

Anchoring and Adjustment

Capital Growth

Basing

Comparable Company Analysis

Beta Stocks

Lump Sum

Invest & Trade with a Trading
Platform That's #MadeForTrade

Dividend Stocks

Dividend Stocks

Definition of Dividend Stocks

Anchoring and Adjustment

Capital Growth

Basing

Comparable Company Analysis

Beta Stocks

Lump Sum

Invest & Trade with a Trading Platform That's #MadeForTrade

Invest & Trade with a Trading
Platform That's #MadeForTrade