What is a dividend and how do I receive it?

A dividend is a portion of a company's profits that gets paid out to shareholders. When you own shares of a dividend-paying stock, the company will deposit these payments directly into your investment account, typically quarterly (four times per year). The more shares you own, the larger your dividend payment will be. It's essentially getting paid just for being a partial owner of the company.

What is dividend yield and why does it matter?

Dividend yield is the percentage return a company pays out in dividends relative to its stock price. For example, if a stock is trading at $100 and pays $3 in annual dividends, its dividend yield is 3%. This number helps you compare the income potential of different dividend stocks regardless of their share price. Generally, a higher yield means more income per dollar invested, though extremely high yields can sometimes indicate risk.

What is an ex-dividend date?

The ex-dividend date is an important deadline that determines whether you'll receive an upcoming dividend payment. To get the dividend, you must purchase the stock before its ex-dividend date. If you buy on or after this date, the seller will receive the dividend instead. Think of it as a cutoff date that the company uses to determine who's eligible for the next dividend payment.

Why do companies like Apple and Microsoft pay dividends?

Companies like Apple and Microsoft pay dividends as a way to reward shareholders and signal financial strength. When a company has grown to a certain size and generates more cash than needed for operations and growth, paying dividends becomes an attractive way to return value to investors. For established companies like those in this group, regular dividend payments help attract long-term investors and demonstrate management's confidence in the company's stable financial future.

What's the difference between growth stocks and dividend stocks?

Growth stocks typically reinvest most or all of their profits back into the business to fuel expansion, leading to potential share price increases but little or no dividends. Dividend stocks, on the other hand, regularly distribute a portion of their profits to shareholders as cash payments. Many companies in this collection, like Apple and Microsoft, actually combine both approaches—they continue to grow while also paying dividends, offering investors potential price appreciation plus regular income.

12 handpicked stocks

Popular Dividend Stocks

Invest in well-known companies that not only offer growth potential but also pay you a regular income. These household names have strong track records of sharing profits with their shareholders through dividends.

Han Tan | Market Analyst

Updated 2 days ago | Published at mai 24