Write the difference between dividend and growth.

Banking & FinanceFinance ManagementGrowth & Empowerment

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.
raja
Published on 25-Sep-2020 17:00:03
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