I think its not necessarily that dividend yield stocks cannot build capital. Obviously you cant compare them to the high growth companies but to people with a preference for lower volatility a carefully selected portfolio with decent dividend yield can give good income and also capital appreciation in future. Few things which one should consider while selecting such a portfolio is only include companies where:

a) Dividend payments can be sustained in the long term (think non cyclical business)
b) Scope for dividend increases in the future and hence avoiding companies with unsustainable payout ratios

I think the call is highly personal. If one is in capital building stage, it doesn't make sense to hide in div. yield stocks. If one has already built a nest egg larger than required and is feeling uneasy, div. yielding stocks might be the right choice. Most people would NOT have built a nest egg larger than required.

At the cost of being repetitive, let me elaborate since fear does terrible things to our rationality. I see 2 main risks for all the above stocks:

1. Opportunity cost - "Time is the friend of the good business, and enemy of the mediocre business".
   I think the main reason people might be looking to hide in div. yield stocks right now is to get less damage in a bear market and convert the capital to high growth stocks when the dust settles. But cash (read as cash/bank FD) is the best place to hide for such a purpose (I am not advising to liquidate one's portfolio). It is certainly true that high yielding stocks won't fall as much as small/mid cap or even some large cap stocks in a bear market. But that is just relative - in absolute terms 20-30% falls are nothing. And stocks can quote at less than cash on books (which should also be discounted by 16% for DDT). Though only for a short time, but exactly when your 30% compounding machines are available at 15-20 PE. Even if the yield is 2-3% more than FD rate, that gives 10% over a 3 year period. And like I said before, one incurs a huge opportunity cost in holding div. yielding stocks for a long time.

2. Cyclicality - Most of the commodity stocks can keep going down like in a bottomless pit. Porinju is smart and might get it right, but it is VERY difficult for an average valuepickr to make money from such stocks even once in a row - because you need to get 2 calls right - buy and sell. Even if Porinju is buying right and sells right, we don't know when he will sell. Btw, NALCO is 25% down since he tweeted about it on Aug 10. And unlike most of the secular growth stories discussed here, 5-10x moves on either side over a cycle are common for cyclicals. We don't know whether Porinju is averaging down, or whether we have nerves like him. No one (including in the China's finance ministry or LME) knows when we reach a bottom. With the China export engine coming to a stop, there is no bottom in sight - I am not saying this time is different, I am just saying that this time things could be amplified further.

For PSU stocks, there is a third risk, namely govt intervention. Disinvestment might keep prices at bay. From the div. yield perspective, its nice that govt. is arm-twisting companies into paying high div. Further, NALCO and NMDC have 4.6kcr and 18kcr of cash. But all this could backfire due to the law of unintended consequences if the co. decides to start using its cash rather than pay dividend and ends up di-worsifying.

For Vedanta, I don't see any other risks (mainly because I never thought of investing in it), but I see one thing for CERTAIN. They WILL fleece minority investors. I am saying this not because I have a crystal ball, but because I have looked at the past track record.