When markets turn stormy, moor yourself to dividend

In times of market turbulence, investors could anchor themselves to companies that pay high dividends, which help reduce losses, say analysts. The Nifty Dividend Opportunity Index of 50 companies ranked by annual dividend yield has outperformed the benchmark Nifty over the past three months by over 2 per cent. Companies with dividend yields of over 4 per cent include Coal India, Clariant Chemicals, RCF, Oil India, IL&FS Transportation, Power Finance Corp, Nalco, NMDC and Hexaware. These companies have fetched returns of at least 10 per cent in each of the past three years. "High dividend yield stocks are ideal for those investors who are looking for decent return in bull markets, but want to cushion themselves in falling markets. Historical data shows these stocks have managed to protect the downside somewhat in falling markets, and at the same time given decent returns in a bull market," said G Chokkalingam, founder, Equinomics Research.