How To Maximise Your Retirement Portfolio With High Dividend Yield Stocks

Building a retirement corpus is crucial for ensuring a steady income in your golden years. It is important to remain consistent in investments and build a portfolio that balances growth and income. Diversification of portfolio across assets like fixed deposits (FDs), mutual funds and equity shares could be helpful in minimising risks while ensuring long-term growth.   

High dividend-yield stocks could be a suitable addition to your portfolio as they offer an opportunity to create steady income. Dividend stocks also help in generating passive income during your service years.

A dividend is the portion of a company’s profit distributed to its shareholders from earnings. Hence, dividends from well-performing companies can be used in the portfolio to supplement the corpus. They are like an additional income, which investors can receive even during service years.

Dividend payouts are finalised by the Board of Directors and require shareholder approval. Generally, companies pay dividends quarterly or annually. High-yield dividend stocks are those that provide relatively higher income compared to other stocks. A strong record of dividend payouts makes shares of such companies a valuable component for a retirement corpus.

Dividend yield measures the dividend income relative to a stock’s current market price. Here’s the formula used to calculate the dividend yield of a stock: (Annual Dividend/Share Price) × 100. Generally, a dividend yield of above 5% is considered attractive to investors.

Hence, investors seeking an additional income in retirement years may consider including high-yield dividend stocks in their portfolios. It’s important to note that dividend income is taxable. It is added to the investor’s total earnings in a financial year and taxed as per the applicable slab rates.  

There are several companies with a strong track record of paying high-yield dividends. Some prominent names include Coal India with a 12-month dividend yield of 7.1%. This means that over the past year, the total dividends paid by Coal India amount to 7.1% of its current share price.

Other names include Vedanta, ONGC, Wipro, Gail India, Power Finance, ITC and TCS, among others. Investors can explore such stocks after evaluating the financial health, dividend history and growth objectives of these companies.

https://docs.google.com/spreadsheets/d/1U-gGrvU0x-0wrQC3jGesX4b3OGIwBmTZyYg5ziUxzQE/edit?usp=sharing