Thread by @Finology_Quest

Companies that have the highest dividend yield:

Vedanta 21.03%
NMDC 13%
Rec Ltd 12%
IOCL 11%

But what if I tell you dividend-paying stocks are bad😎

Let's understand this through a detailed 🧵⤵️

#stockmarkets #dividends

When we invest in a company we hope that the management is going to use that money for the growth of the company.

But, don't you think giving dividends is like returning the investors' money, which indirectly shows that the company is unable to manage the invested money efficiently.

Let's take an example of IOC, which has a dividend yield of 11% & total of Rs1,412 cr shares. The company paid around Rs15000 cr in dividends.

But if instead of paying off this money as dividends they had used it to repay their debt obligations, they'd have ended up saving on interest costs, further leading to increased profits & better growth in share prices.

Also, paying dividends reduces the share prices & value of the company. If the company actually have free cash, why not just buy back the shares?

What do you think about this? Would you still buy high dividend-paying stocks? Let us know your view on it!

Also, If u wnt to learn more abt concepts lyk dividend, buy back, right issue, etc, we have an interesting fun learning video course on Value Investing which will help you learn how these corporate actions affect the share prices & the investors. quest.finology.in/racetracks#aca…