Write the difference between dividend and growth.

The major differences between dividend and growth are as follows −

Dividend

• Shorter time horizon (cash inflow is regular).
• Cash flow (stocks) at periodic intervals.
• Release of excess return.
• Tax free (money received).
• Less risk (money will get at regular intervals).
• Outperform growth stocks.
• Less volatile.
• Capital appreciation and cash flows (upside).
• Usually perform even in bear market.
• Investors will look for low market value than intrinsic value.
• Investors will look at dividend yields, pay-out ratio.

Growth

• Longer time horizon (cash inflow is end of period).
• Cash flow at redemption/sale only.
• Re-investment of excess return.
• Tax free (money received), only for some schemes of mutual funds.
• Higher returns for investors.
• Underperform than dividends stocks.
• More volatile.
• Only capital appreciation (upside).
• Poorly perform in bear markets.
• Don’t consider intrinsic value, if stock price is rising.
• Will trade high PE ratio.

Mandalika

Published on 25-Sep-2020 13:30:03

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