InvestorQ : Do high dividend yield stocks act like a floor for the stock price?
Rashi Mehra made post

Do high dividend yield stocks act like a floor for the stock price?

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3 years ago
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That is substantially true in the Indian context. The most credible metrics of valuing an overall market has generally been the dividend yield. In fact, when the dividend yield is combined with the P/E ratio for the market as a whole, it gives a fairly accurate picture of whether the market is overpriced or underpriced. For example at the peak of the market in early 2008, the P/E of the market had gone as high as 28-30 and the dividend yield had fallen to as low as 0.8-0.9. This combination has typically been the point where the froth in the market has tended to unwind. Even mediocre stocks with attractive dividend yields tend to take support in terms of prices.

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