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 dividend-paying stocks, the company will deposit cash into your investment account on specific payment dates, typically quarterly. It's essentially the company sharing its success with you as a partial owner.

What is dividend yield and why does it matter?

Dividend yield is the percentage return a company pays out in dividends relative to its share price. For example, a $100 stock that pays $4 in annual dividends has a 4% yield. Higher yields mean more income for each dollar invested, though extremely high yields (above 8-10%) may signal potential dividend cuts in the future.

What makes a company a "dividend champion"?

Dividend champions are companies that have not only paid but increased their dividends consistently for 25+ years straight. This elite status demonstrates financial strength, disciplined management, and a shareholder-friendly approach. These companies have maintained dividend growth through recessions, market crashes, and changing business environments.

Can dividends help protect against inflation?

Yes! Many companies in this portfolio increase their dividend payments annually, often at rates higher than inflation. This means your income stream can grow over time, helping to preserve your purchasing power. Unlike fixed-income investments with static payments, growing dividends can provide a hedge against rising prices.

What are ETFs and how do they fit into a dividend strategy?

ETFs (Exchange-Traded Funds) are investment vehicles that hold baskets of stocks or other assets. Several ETFs in this portfolio (like SDY and PID) specifically track indexes of dividend-paying companies. They offer instant diversification across many dividend payers in a single purchase, making it easier to build a broad income stream without buying dozens of individual stocks.

15 handpicked stocks

First Paycheck

Get paid to invest with this collection of dividend champions. These carefully selected companies have proven track records of sharing profits with shareholders, creating a reliable stream of income that feels like receiving a regular paycheck from your investments.

Han Tan | Market Analyst

Updated 2 days ago | Published at जून 17