Just eight months back, when interest rates on fixed deposits were hovering around 5%, it made sense to own stocks where dividend yield was then 7% . Now with interest rates on FDs hovering above 7%, buying a stock with a 7-8% dividend yield may not appear the best decision. In such conditions, investing in stocks where the dividend yield is not even 5%, would appear to be even worse. But if dividend yield of 4-5% is combined with probability of capital gains, based on long term track record, it is worthwhile to bring that stock on your watch list.
