Heard on the Street: High dividend yield puts Munjal auto shares on fast track

Munjal Auto rose to a new high on Friday, with investors flocking to the counter to benefit from high-dividend yield offered by the auto ancillary company. The stock climbed to Rs165.8, before closing a bit lower at Rs163.3, up 11.2% over the previous day’s close.

The counter attracted volumes nearly 16 times higher than the two-week average on the BSE. According to analysts, investors have been focusing on high-dividend yield companies which have emerged as ‘safe bets’ amid generally choppy market conditions. This has helped many such stocks gain sharply even while the broader market continued to reel under global crisis for past few weeks.

Munjal Auto has announced a dividend of Rs7.5 per share for 2010-11, thereby offering an attractive yield of 4.6% based on Friday’s closing price. As much as 69% of the day’s trading quantity was delivered in the market, reflecting genuine interest in the counter.

Contributed by Vijay Gurav