- The dividend yield is the most important metric to understand how much you’ll make in dividends each year vs. how much you’ll have to pay to buy a share.
- Most dividend yields range from 1% – 6%, but some companies pay less than 1% and certain kinds of companies can go much higher.
- We show how important dividends are to your investing profits and provide links to a stock screener that can filter the best dividend stocks.
Put simply, a dividend is a cash payment from a company to its shareholders.
Dividends are usually paid quarterly and companies strive to keep them relatively steady (or growing) over time.
While it may seem like a strange concept to collect an income check from a company just for buying their stock, it actually makes sense when you think about what it means to purchase a company’s shares.
When you buy a share of stock, you’re investing your money to buy a small piece of a company, and in return, that company will send you a small portion of their profits (since you’re now an owner).
In general, mature companies that are growing slowly tend to pay a dividend while companies that are growing quickly tend not to pay a dividend.
Most investors don’t realize the importance of dividends for their long-term investing profits.
Research shows dividends contribute an incredible…