Dividends should be an integral part of stock selection. When a company earns net income, it can either reinvest it, pay off debt, or distribute it to shareholders. Not all companies pay dividends. Financial advisors may help investors build portfolios with dividend-paying stocks to maximize value.
What are Dividends?
Dividend yield is defined as the dividend divided by the share price. Dividends are payouts to shareholders at regular intervals. The amount is expressed as a dollar value per share, and it can apply as cash, called a cash dividend, or as additional stock, called a stock dividend. The total return on a stock investment is the sum of dividend payments and capital gains.
Dividend Dates
There are four major dates with which shareholders should be familiar. They are the declaration date, ex-dividend date, date of record, and payment date.
The declaration date is when the board of directors informs shareholders about the upcoming dividend, amount, and payment date. Dividends are typically paid quarterly, but some companies will pay annually or monthly.
Afterward, the ex-dividend date is the first day of a short period when new shareholders will be ineligible to receive the upcoming dividend payment. The date of record is typically 1-2 business days later and is when an individual must hold stock in the company to receive the payment for that period. Finally, the payment date is when the dividend is officially paid in the form of cash or stock.
Investing in Dividend-Yielding Stocks
For those looking to build their portfolios with dividend-yielding stocks, our expert advisors are here to help. First State invests in Gold Chip stocks, which yield at least 20-25% of their earnings. For a free consultation with professional financial advisors, contact us at (918) 492-1361.
This overview is for informational purposes only and is not a recommendation. It should not be the sole deciding factor in making an investment. Investing is a risk and, as with all risks, a positive return is not guaranteed. Past performance does not indicate future results.