InvestorQ : Is it worthwhile to currently invest in PSU stocks with high dividend yields? What should be my holding period?
Dia Deshpande made post

Is it worthwhile to currently invest in PSU stocks with high dividend yields? What should be my holding period?

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Ria Jain answered.
2 years ago
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PSU stocks are definitely looking like value stocks but they may take some time and some action on privatization to actually give you returns. There was a time when PSU banks were among the top performers in the stock markets. Stocks like BEL, BEML, BHEL, PSU banks had all been super outperformers through the 2000s. However, problems have been quite a few in the last few years. The PSU banks were plagued by nearly $200 billion worth of bad debts. The other PSUs have been hit by unfriendly regulation and also constraints on input supply.

Competition has been eating into the market share of the PSUs, be it in telecom, airlines, life insurance, general insurance or banking. Investing directly in PSU stocks has its own set of risks because it comes with a major concentration and regulatory risk. Most individual investors may find it hard to handle the risks and in most cases, the waiting period may be just too long. However, by investing directly in PSU stocks, you do get the benefit of catching large quality stocks at a low and that can result in big profits when the turnaround comes.

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