Dividend Investing: Real Portfolio Insights & Key Learnings

Last year, I curated a list of dividend-paying stocks with a clear objective: to build a fundamentally strong dividend portfolio. The selection was made using strict filters to ensure quality and long-term sustainability. Selection Criteria:

1. Undervalued stocks
2. Zero-debt companies
3. High dividend yield
4. High Return on Equity (ROE)
5. Strong FII (Foreign Institutional Investor) participation
6. High DII (Domestic Institutional Investor) holding
7. Strong Return on Capital Employed (RoCE)
8. High promoter holding

Portfolio Stocks:

• BPCL
• Banco Products
• Coal India
• DB Corp
• Gujarat Pipavav Port
• HCL Technologies
• IOCL
• ONGC
• Power Grid Corporation

---

Portfolio Performance (as of 19th June 2025)

• Dividend earned: ~8% on the total investment amount
• Capital depreciation: ~-8.88%
• Net return: Close to 0% (Dividends + Capital Gains)

---

Key Learnings for Investors:
1. Dividends Alone Are Not Enough Even if a company is fundamentally strong, capital depreciation can completely offset the dividend income.

2. Market Cycles Play a Big Role Macroeconomic factors, sector rotations, and investor sentiment can drive stock prices down — irrespective of company fundamentals.

3. Diversification Is Crucial A portfolio focused solely on dividend stocks, without broader diversification, can carry higher risk.

4. Total Return Should Be the Focus Chasing high yield without considering capital appreciation may not deliver the best results. A balanced approach works better.

5. Timing and Valuation Matter Buying good companies at overvalued prices can result in negative returns. Entry points are critical.

---

Final Thoughts

Dividend investing can provide stable income, but it's not a guaranteed way to grow wealth. As this real example shows, even with strong filters and a quality stock list, the returns may end up flat in certain market conditions.

Manage expectations, diversify your portfolio, and always take a total-return approach when investing.
Invest wisely.