Power Finance Corporation (PFC) declared a dividend of Rs 10 per share last year. In the same period, the share price has grown 28.8%. This means that PFC’s dividend yield and share price appreciation have delivered a double bonanza for its long-term positional shareholders since PFC shares were priced at around Rs 120 per share a year ago.

Choosing to invest in dividend stocks instead of risk-free small saving schemes like the Public Provident Fund (PPF), Employees’ Provident Fund (EPF), and bank fixed deposits (FDs) can often yield better results. Dividend-paying stocks can provide double the benefits when their dividend yield exceeds traditional risk-free investment options while also increasing in value during the investment period.

In the past year, PFC declared a dividend of Rs 10 per share on four occasions. It traded ex-dividend stock on June 9, 2022, to pay its shareholders an interim dividend of Rs 1.25 per share. Similarly, it traded ex-dividend stock on September 1, 2022, to pay an interim dividend of Rs 2.25 per equity share. PFC shares traded ex-dividend stock on November 24 2022, for an interim dividend of Rs 3 per share to its shareholders, and again on February 24 2023, for an interim dividend payment of Rs 3.50 per share.

PFC’s shares traded at Rs 120 per share at the beginning of FY23, whereas today, PFC’s share price is Rs 156.50 per share. This means the dividend stock has appreciated by 30% in the last year. PFC’s dividend yield in FY23 stands at 8.35%. If we add the dividend yield and PFC share price appreciation in the previous year, the net return given by the dividend-paying stock is around 38%.

In the last year, PPF interest rates have remained around 7.1%, whereas EPF interest rates have remained at 8.1%. However, bank fixed deposit (FD) returns have increased from about 5.5% to around 7% last year. Comparing PFC’s dividend yield in FY23 with these traditional investment options, PFC has outperformed PPF, EPF, and bank FD returns.