KARACHI, May 22: Never mind the steep decline of 300 points in four sessions, stock brokers and analysts beckon the brave to defy the ‘herd mentality’ and seize the stocks as they offer attractive valuations.

Humaira Zaheer, analyst at IP Securities says that in their list of core stocks, Hubco took the top position based on dividend yield. Hubco was trading on Tuesday at Rs20.75 while the expected full year dividend for the company was Rs8 per share, which translated into a dividend yield of 39 per cent. The company had already paid out Rs4 per share earlier this year as interim and another Rs4 per share was expected after June 2002. Fauji Fertilizer was noted to offer the second best dividend yield of 21 per cent on the basis of an expected payout of Rs8.5 per share for the year; the stock was trading at Rs40.85.

PTCL was third in the dividend growth expectations for financial year 2002. The company’s earnings for FY02 were expected at Rs19 billion as against Rs18.1 billion for the previous year. Expected cash dividend for FY02 was around Rs2.5 per share, against Rs2.4 per share for last year, which translated into dividend yield of 17 per cent on the share’s price of Rs14.85. The Sui twins, were also considered to be attractive as they each offered 14 per cent dividend yields.

According to another analyst at another brokerage house, dividend yield on PTCL worked out at 15 per cent. This analyst thought that a 15 per cent yield was quite attractive in a company whose earnings were inherently stable and for whom cash was quite seriously not an issue. He said that 15 per cent was at 9-10 per cent premium on the return on savings (PLS) accounts and 3-4 per cent higher than the return on National Savings Scheme (NSS) instruments, term finance certificates (same risk category) and term deposits.

The analyst observed that an investment should be taken with greater weight given to the dividend before and after the crisis. In case the investor’s exposure was based on non-leveraged funds, he had nothing to worry about. It was however, slightly a different matter for investor, who would prefer to have cash in case war did really break out or those investors who had taken exposures in the market, on borrowed money.