Should You Invest for Dividend or Profit ?

By 10paisa.com

For most people investing in the stock market is all about waiting for the prices of the shares in their portfolio to reach a targeted level and selling them off for a profit. Very few, except if they are the promoters of a company with very large stock holdings, look at their stock investment with the point of view of earning regular dividend.
Part of the reason has to be attributed to the fact that dividend distribution being dependent upon the company board’s discretion, people are not really sure that they can think of it as a reliable income stream.  Then there is also the fact that for large numbers of retail investors in the stock market, there is no sense of real involvement in the conduct of the business of a company whose shares they might own. Sure as equity shareholders, they are part owners of the company in the technical sense. But they don’t look upon themselves as entrepreneurs with a stake in the success of the business that they are part owners of. They are largely interested in making a killing at the bourses when the price of their stock is high and walk away with the profit.
However, it does make sense even for fledgling investors to invest in at least a few “dividend stocks.”  As a matter of fact, one can carry out a research and identify several sterling Indian companies that have an excellent record of paying dividend consistently. There is no reason why you should not look at investing in such companies, with the intention of creating a regular passive income stream.
On the other hand, if you were able to identify stock with great potential for growth at an attractive price, you would be looking at handsome returns down the line. Even the most promising company in the world would be a bad buy if its price is way too high.  There are so many shares out there which are currently grossly undervalued, even though the prospects for growth are clearly stupendous. These are the ones you should look at buying.
This is where the stock recommendations received from registered research analysts like 10paisa.com can put you on the path to creating wealth in the time ahead by helping you judiciously invest in growth stocks with modest valuations.  One of the reasons that 10paisa.com focuses on small cap stocks is the fact that there are great opportunities available in a number of undervalued small cap stocks.
In the ultimate analysis one could own a combination of growth and dividend stocks that help us obtain both stable regular returns and higher profits over the long run.  Of course, everyone has their own investment strategy with some choosing growth over stability and vice versa. The guiding mantra should however always be to not take any undue risks and put one’s hard earned money at risk. Discretion in always the better part of valour, when it comes to investing in the stock market.