This nifty stock is down 32% in 3 years, while Sensex is up 65%, should you buy?

How has Coal India lagged behind?

Coal India share performance over the past 3 years

January 9, 2019

January 8, 2022

Percentage of fall

Coal India share price 232 rupees 157 rupees -32.00%

Sensex performance over the past 3 years

January 9, 2019

January 8, 2022

Percentage of fall

Sensex closure 36212 59744.65 65.00%

Obviously, while the Sensex has risen almost 65% in the past 3 years, Coal India stock has fallen almost -32%. However, we have to take into account the dividends the company has declared in the past 3 years. If we took the same into account, the stock’s returns would always remain negative.

Should you buy Coal India shares?

Should you buy Coal India shares?

In recent months, when there was a shortage of coal, the stock rose sharply above Rs 200 and has fallen since. The shares of the company are bought by investors solely for its dividend. Beyond that, nobody worries about the fundamentals and so on.

The company has a virtual monopoly, the only risk being labor issues. The business is robust and India being a large consumer of coal and even the import of coal, the risks are practically nil. That said, we expect the title to continue to evolve in a narrow band. If the stock cannot recover at a time when global commodity prices are rising, what will happen when global commodity prices start to decline?

Conclusion

Conclusion

Forget the fundamentals, buy the stock if you want a decent dividend yield every year. Expect dividend yields of 7% or so in the future. Even when the markets are recovering, it is frustrating to watch the Coal India stock languish.

Warning

Warning

Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies and the author are not responsible for any losses caused as a result of decisions based on the article.

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