IT stocks are beginning to offer bank FD-like dividend yields. But is that a trap for investors?

India's once-prized IT stocks are now beginning to pay dividend yields that rival a bank fixed deposit but that should worry you more than it comforts you.

The top five IT companies now offer an average dividend yield of 4.9%, with Wipro at 5.7%, HCL Tech at 5.6%, TCS at 4.9%, Infosys at 4.7% and Tech Mahindra at 3.6%.

These yields haven't climbed because companies are paying out more.

They've climbed because the stocks have collapsed.TCS, Wipro and LTIMindtree are all down at least 50% from their all-time peaks, and Nifty IT is languishing at multi-year lows.

A falling stock price mechanically pushes the dividend yield higher and so what looks like an income opportunity is, at its root, a scoreboard of how much wealth has already been wiped out.<iframe title= IT Stocks With Highest Dividend Yields aria-label= Table id= datawrapper-chart-OaDm0 src= https://et-infographics.indiatimes.com/graphs/OaDm0/1/ scrolling= no frameborder= 0 style= width: 0; min-width: 100% !important; border: none; height= 279 data-external= 1 ></iframe><script type= text/javascript >(function(){function e(){window.addEventListener(`message`,function(e){if(e.data[`datawrapper-height`]!==void 0){var t=document.querySelectorAll(`iframe`);for(var n in e.data[`datawrapper-height`])for(var r=0,i;i=t[r];r++)if(i.contentWindow===e.source){var a=e.data[`datawrapper-height`][n]+`px`;i.style.height=a}}})}e()})(); Bank FD interest vs dividend yieldsFor context, the yields are now inching closer to what banks pay on deposits.