Here's a safe way to make money in a falling market

The steep 800 points, or 4.8 percent fall in the BSE Sensex over the past week would have investors extremely worries, sending them diving for safety.

While the weak-hearted will opt to stay out of the market, shrewd investors know there are ways to profit even in a falling market. One way of doing that is by looking at the dividend yield option. Investors can easily use dips in the markets to pick up stocks with a high dividend yield ratio.

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Simply put, the dividend yield of a company is calculated as annual dividend per share divided by the current market price of that share. The dividend yield of a stock changes as its price changes. When the share price falls, the dividend yield increases and vice-versa.

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In a falling market, stocks with a high dividend yield can be a good investment. Still, investors need to take care - not all high-dividend-yield stocks are winners. A very high dividend yield can also be a warning sign. That’s because in this case, the share price is usually low, having been pummelled by investors for low growth prospects or other troubling reasons.

_Firstpost_did some quick analysis of the top dividend-yield offering stocks as on 18 November. We have limited our universe to the BSE-500 index to ensure that we track only financially sound companies. However, specific shares like HCL Infosystems, Patni Computers and India Bulls Financial Services were excluded from our list because they gave a one-time special dividend. Also, only stocks that offered a dividend of 5 percent or more were included.

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Our list contains around 19 companies offering a dividend yield of 5-8 percent.Here’s the list:

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We also calculated the five-year average dividend yield of companies for investors to get a broader picture of the dividend track record of the companies mentioned.

Polyplex Corporation, the world’s fourth-largest manufacturer of thin polyester film, topped our list, with a dividend yield of 7.86 percent. Its five-year average yield stood at 4.87 percent. However, investors need to be wary about their investment decision regarding this company as it reported a sharp 48.7 percent fall in net profit on top of a 3 percent fall in sales.

3i Infotech came second, with a dividend yield of 7.59 percent. However, its five-year yield was much lower at 2.46 percent. A mid-tier IT company with a market capitalisation of Rs 360 crore, its stock price has been battered byheavy debt, which prompted it to hive off its US-based Global Billing and Payments unit for $137 million in May this year. The September-ended quarter results also do not give any reason for optimism as net sales and profits fell by 22.6 percent and 60.5 percent, respectively.