Dividend and Capital Gains Yield

Dividend yield is a way to measure how much cash flow you are getting for each dollar
invested in an equity position - in other words, how much "bang for your buck" you are getting
from dividends. Investors who require a minimum stream of cash flow from their investment
portfolio can secure this cash flow by investing in stocks paying relatively high, stable dividend
yields. To better explain the concept, refer to this dividend yield example: If two companies both
pay annual dividends of $1 per share, but ABC company's stock is trading at $20 while XYZ
company's stock is trading at $40, then ABC has a dividend yield of 5% while XYZ is only
yielding 2.5%. Thus, assuming all other factors are equivalent, an investor looking to supplement
his or her income would likely prefer ABC's stock over that of XYZ. Capital Gains Yield shows
the price appreciation component of a security's (such as a common stock) total return. For stock
holdings, the capital gains yield will be the change in price divided by the original (purchase)
price.

Income and Growth Stock

Investors who buy stocks typically do so for one of two reasons: they believe that the
price will rise and allow them to sell the stock at a profit, or they intend to collect the dividends
paid on the stock as investment income. Of course, some stocks can satisfy both objectives at
least to some extent, but most stocks can be classified into one of three categories: growth,
income and value. Those who understand the characteristics of each type of stock can use this
knowledge to grow their portfolios more efficiently.
As the name implies, growth companies by definition are those that have substantial
potential for growth in the foreseeable future. Growth companies may currently be growing at a

faster rate than the overall markets, and they often devote most of their current revenue toward
further expansion. Every sector of the market has growth companies, but they are more prevalent
in some areas such as technology, alternative energy and biotechnology.
Most growth stocks tend to be newer companies with innovative products that are
expected to make a big impact in the market in the future, but there are exceptions. Some growth
companies are simply very well-run entities with good business models that have capitalized on
the demand for their products. Growth stocks can provide substantial returns on capital, but
many of them are smaller, less-stable companies that may also experience severe price declines.
Investors look to income stocks to bolster their fixed-income portfolios with dividend
yields that typically exceed those of guaranteed instruments such as treasury securities or CDs.
There are two main types of income stocks. Utility stocks are common stocks that have
historically remained fairly stable in price but usually pay competitive dividends. Preferred
stocks are hybrid securities that behave more like bonds than stocks. They often have call or put
features or other characteristics, but also pay competitive yields. Although income stocks can be
an attractive alternative for investors unwilling to risk their principal, their values can decline
when interest rates rise.

Worthwhile Investment Opportunities

Crescent Steel and Allied Products Limited is a Pakistan-based company. The Company
operates in four business segments: steel segment, which comprises manufacturing and coating
of steel pipes, including double submerged arc welded (DSAW) steel line pipes in diameters
ranging from 8 to 90 and applicator of multi-layer polyolefin coating; cotton segment, which
comprises manufacturing of yarn of various counts of 10s to 80s; investment and infrastructure

development segment, which manages the investment portfolio in shares and other securities,
and property investments, and which operates and maintains a bagasse fired thermal generation
power plant through its wholly owned subsidiary, Shakarganj Energy (Private) Limited. This
company offers good investment opportunity because it gives stable dividend and capital gains
well. The company declared interim cash dividend of Re. 1 per share (i.e. 10%). Moreover in
2013 declared final cash dividend of Rs. 1.5 per share (i.e. 15%) along with issue of 10% Bonus
shares. This aggregates the total cash dividends for the financial year ending 30 June 2013 to Rs.
3.5 per share (i.e. 35%).
Secondly General Tyre & Rubber Co is also a very good investment opportunity ebcasue

iv) compare beta coefficient of individual stocks viz industry and market return
v) use of DDM wherever you feel appropriate to further substantiate your analysis
vi) which company amongst the group of companies assigned is a better performer
comparatively.