By: Dr K C Gupta, YBB Personal Finance

Mini Feature DO DIVIDENDS MATTER?


CONTRARIAN INDICATORS

AAII Bull-Bear Spread +2.1% (below average)
CNN Fear & Greed Index 42 (fear-low)
NYSE %Above 50-dMA 49.29% (negative)
SP500 %Above 50-dMA 47.80% (negative)

ICI Fund Allocations (Cumulative), 7/31/26
OEFs & ETFs: Stocks 62.92%, Hybrids 3.89%, Bonds 17.00%, M-Mkt 16.19%

INTEREST RATES

CME FedWatch
Cycle peak 5.25-5.50%
Current 3.50-3.75%
FOMC 9/16/26+ hike
FOMC 10/28/26+ hold

Treasury

T-Bills 3-mo yield 3.91%, 1-yr 4.13%; T-Notes 2-yr 4.37%, 5-yr 4.54%, 10-yr 4.78%; T-Bonds 30-yr 5.24% (normal yield-curve);
TIPS/Real yields 5-yr 2.17%, 10-yr 2.43%, 30-yr 2.96%
FRNs Index 3.806%

Bank Rates www.depositaccounts.com/

Stable-Value (SV) Rates, 9/1/26
TIAA Traditional Annuity (Accumulation) Rates
Restricted RC 5.50%, RA 5.25%
Flexible RCP 4.75%, SRA 4.50%, IRA-101110+ 4.20%
TIAA MYGA 4.75% (3-yr), 4.95% (5-yr), 5.05% (7-yr)
TSP G Fund 4.875% (previous 4.875%)

India Fear & Greed MMI 43.87 (fear)
Weekly ETFs: INDA +0.71%, INDY +0.23%, EPI +0.84%, INDH -0.68% | SPY +0.11%

The data above are as of Sunday preceding the publication date.

ECONOMY

US is accusing 40 global partners including India, Europe, Canada, Japan, Mexico, etc of Chinese transshipments. India’s Pune-Gujarat-Chennai production belt was cited for pumps/ compressors. In basic transshipment, products are minimally modified & repackaged to avoid US tariffs & that’s illegal. Content origination is a complex area that is subject to various interpretations.

ENERGY

ONGC got the license from US OFAC to resume full operations in Venezuela. In the joint Indian-ONGC – Venezuelan-PDVSA San Cristobal oil project, PDVSA holds 60%, ONGC 40%. ONGC also holds 11% in Carabobo oil project. Venezuelan President Delcy Rodriguez recently visited India in 01/2026, met with PM Modi & other government officials, & also stopped by Sai Baba ashram (temple) in Puttaparthi, AP, as she is a devotee.

FINANCIALS

There were rumors that “free” UPI may charge 25-40 bps on transactions over Rs 2,000. And that this was in response to US raising free (government-subsidized) UPI as an unfair trade practice that hurts US financials operating in India; government cost/support for UPI is estimated at $200-250 million/yr. UPI has been free for consumers since 2020 & the proposed merchant fees (MDRs) on larger transactions seem nominal. According to the new rules, government will allow but not impose UPI merchant fees. So, UPI will now discuss the fee issue with merchants. MDR fee will be shared among the transaction processing banks & nonbank financials.

SEBI is simplifying NRI KYC to facilitate securities transactions (new accounts, etc). After implementation, KYC can be done from the countries of NRI residences. This will include NRIs with OCI cards. The current KYC procedures may require physical presence in India. The KYC rules have been simplified in other areas already – banking, pensions, etc.

SPECIAL TOPIC – DO DIVIDENDS MATTER?

Yes!
A common example is often cited – a company pays dividend on ex-div date & its price goes down by the dividend amount. So, if one reinvests, one has the same amount of money before & after dividend, so, “dividends don’t matter”.

While that’s is technically correct, there are other factors to consider.

1. Many stocks recover their prices soon after ex-div; many technical analysts use price triggers, not adjusted prices. This doesn’t apply to funds (dividend-growth VIG, current-dividend VYM, dividend-blend SCHD) – the effects at holdings level aren’t seen in the fund NAV.

2. If a stock pays d% dividend, the company has to grow only at +d% long-term to compensate for dividends paid; if not, there will be a disaster soon.

3. Dividends taken may be used for expenses (those who need them put high value on them) or reinvested elsewhere.

4. Selling nondividend stock to get small income is a valid idea, but you are subjected to market volatility that benefits AIP/SIP (accumulations), but not AWP/SWP (decumulations).

5. If you don’t need dividends, it may be better to invest in high-growth, low/no-dividend stocks. Dividends are paid from cash flows & require some discipline by companies & that’s indicated by any level of dividends. A high-dividend stock/fund with reinvestments just won’t have as much growth; sure, the #units held will grow impressively, but prices won’t & the current value = #units x price.

So, ask: Is it better for a company to pay you dividend or keep it in retained earnings for internal growth? If you think that the company can do a good job with retained earnings (internal growth or M&A), then that’s fine, but if not, you would rather have dividends in your hands for whatever (reinvesting elsewhere or expenses). Also, reinvestments increase your risk exposure in that company.

For more information, see https://ybbpersonalfinance.proboards.com/