Shyam: Rupal, I was reading about IRB InvIT Fund — its price is around ₹62.50 per unit, and it’s paying ₹10 per year in dividends! That’s like a 16% yield. Isn’t that incredible?
Rupal: (smiling) It surely grabs attention, Shyam. A 16% dividend yield looks great on paper. But before we pop the champagne, let’s understand where that dividend is coming from.
Shyam: I know it’s an infrastructure investment trust. But how exactly do these InvITs work?
Rupal: Good question. InvITs like IRB InvIT own income-generating assets — in this case, toll roads. They collect tolls or annuity payments and distribute most of that cash to investors. By regulation, they must distribute at least 90% of their net distributable cash flows as dividends or interest.
Shyam: So, they’re not like companies that reinvest their profits to grow further?
Rupal: Exactly. InvITs are income vehicles, not growth engines. That’s why you see regular ₹2-per-quarter dividends from IRB InvIT since 2023. It’s steady cash flow, but remember — if toll income falls or traffic slows, payouts could reduce.
Shyam: Hmm… that’s fair. But the regularity of dividends — ₹2 every quarter — sounds reassuring. Isn’t that a sign of consistency?
Rupal: Yes, it shows stability, and the recent numbers support it. For the June 2025 quarter, IRB InvIT earned ₹292 crore in revenue and ₹99.6 crore in profit, up by 6% and 16% year-on-year respectively. But Shyam, consistency doesn’t always mean guaranteed safety.
Shyam: True. So, would you suggest I include it in my portfolio?
Rupal: If your goal is to earn steady income rather than chase capital appreciation, then yes — you could allocate a small part, let’s say a 5%, to IRB InvIT. But it should sit alongside other stable assets. Think of it as one piece of your income puzzle, not the entire picture.
Shyam: Got it. I’ll treat it as an income option, not a growth bet.
Rupal: That’s the right approach. And remember, Shyam — investment in securities markets are subject to market risks. Always read the related documents carefully before investing.
Shyam: (grinning) You sound like the fine print at the bottom of a mutual fund ad.
Rupal: (laughs) Maybe, but it’s the most important line! Past performance isn’t indicative of future returns, and what looks like a “safe” 16% yield could change if business conditions shift.
Shyam: Fair point. I’ll keep that in mind. Thanks for the reality check, Rupal — I almost mistook a high yield for a guarantee.
Rupal: Happens to many investors! Always remember: high yield often comes hand-in-hand with high risk. Balance, patience, and understanding your goal — that’s the real dividend of good investing.
Simplified Money Talks 