Income Deposit Security (IDS)

An IDS or Income Deposit Security is a hybrid security which consists of both stocks and bonds combined together to form a single instrument. The IDS is listed on a stock exchange, but the underlying securities may or may not necessarily be listed. In IDS, the investors have an option to separate these securities after a minimum stipulated time frame. These can then be traded separately. Income Deposit Security holders are entitled to receive dividends as well as interest on their holdings periodically, as per the terms. The dividend component is on shares and the interest component represents the debt securities. IDS issuers are financially strong companies with good cash flows who can distribute consistent and timely dividends. IDS issuers are monitored closely by regulators and investors alike. IDS investment is appropriate for investors who are more inclined towards stability as well as capital appreciation.