Importance of Dividend Index in Portfolio

Total Return Indices study has a lot to tell about the performance of the company. However, there is a lot more that the Thematic Investing has to add to the market study. Here we tend to focus on the Importance of Dividend Index in Portfolio.

1. Dividend Index provide help to reserve for the investors the purchasing power of the capital. Over the period of time, the companies engaged in payment of Dividend Index have given investors an annual return greater than the inflationary rate.
2. Dividends provide benefits when it comes to tax payment. Certain dividends face a tax of around 15%.
3. It is a direct insight into the standing of the company in the market that too with precision. The sound reason being that it provides the ongoing as well as the regular feedback regarding the performance of the company in the market.
4. Dividend payments leave no scope for any company to manipulate their standing in the market. This provides a way for the growth that too on the fair basis.
5. Dividend payments and the dividend payout ratio both are immensely important to analyse the performance of the company. Higher the dividend payout ratios greater the stability a company has indicating better future growth.
6. Companies that tend to pay the dividend index are better survivals during the adversities as compared to the counterparts.
7. Volatility tends to get reduced with the Dividends. Other things like Stock prices change constantly but this changes only one time in a year which tends to reflect how the company actually performs. This precision provides a help in the long run and better growth opportunities.
8. Dividends play a very vital role in the total investment return as these tends to contribute more than the mergers and acquisitions. In total returns a major share goes to it.

All in all this is the Importance of Dividend Index in Portfolio. Not only does it reveal the performance of the company in the market but at the same time helps you to have a true picture in front of you.

Source : https://thematicindex.beep.com/