Return on Shares

Return on Shares is essentially what you earn from your investment. Shareholders get their returns in two ways, which are through dividends and capital appreciation. The dividend payments or share in profit is sent out every year if a company makes profit and if it wants! In India, you would usually observe a pattern wherein the PSU’s declare more dividends than private sector enterprises. It is because the government who holds a stake in the PSU wants to ramp up its revenue for future expenses.

Capital appreciation is when the share price goes up in value and the difference between the current market price (CMP) and your purchase price is positive. Remember you can still receive dividends even when your capital has depreciated over time.