What is a Dividend?  A Simple Explanation + 4 Tips

What is a Dividend?  A Simple Explanation + 4 Tips

Whether you are just starting to invest or have been investing for decades, dividends can be a valuable part of anyone's investing portfolio. 

Generally speaking, a dividend is a distribution of a portion of a company's earnings paid to the shareholders.

What is a Dividend?

Why Companies Pay Dividends

The simple answer is to attract more investors. Many companies that payout dividends are well-established and stable companies. 

When it comes to dividend investing, find companies with solid track records, meaning they are well established and have high market values.

Find Companies With Strong Track Records

Find Sustainable Dividends

Make sure you find a company that has a payout ratio in the 30% – 50% range as anything higher could be unsustainable.

Anything lower means the company is more focused on growth than paying out dividends.

So, yes, you might find stocks with higher yields, but that doesn't mean anything if that company can't sustain those yields or raise its dividends year over year.

Annual Increase Streaks

Speaking of long-term investing, the best way to gain the most growth from your dividend investing over the long term is to participate in the DRIP consistently.

Always Reinvest Dividends

Swipe Up to read more about  Dividends!

Swipe Up to read more about  Dividends!

Swipe Up to read more about  Dividends!