How does dividend investing work?

Asked 3 years ago

Hi, I’m new to investing. How do dividend investments work? Also, what are some good stocks with dividends that you recommend I buy into? Thanks

Andrew Moran

Wednesday, June 30, 2021

Welcome to the world of dividends!

It is simple enough: You purchase shares in a company or exchange-traded fund (ETF) that pays a quarterly or monthly dividend. This is money that represents a portion of the profits.

You can either use these payments to reinvest in the company or transfer the funds to your savings account. It is one of the best methods of making money in the stock market over the long term.

Now, there are plenty of good stocks with dividends, but here are three investments with a terrific dividend:

Pembina Pipeline (PBA)

  • 06/29: $31.88
  • Dividend Yield: $0.17 (monthly)

AT&T Inc. (T)

  • 06/29: $28.66
  • Dividend Yield: $0.52 (quarterly)

Restaurant Brands International (QSR)

  • 06/29: $64.43
  • Dividend Yield: $0.53 (quarterly)

Filip Dimkovski

Saturday, January 08, 2022

In general, dividend investing is a method used by people to create an income stream from stocks, and it's sometimes regarded as the most reliable way of investing. Dividends are the portion of a company's earnings given to shareholders, and they're typically given on a quarterly or yearly basis.

So, how do dividends work? Let's say that a company issues a stock for sale at a certain price. If you buy 100 shares at $20 each (having a $2,000 total), you own 1/100th of the company. If it makes money, it can keep a part of the profit in its reserve (around 30-50% of the profit), and the rest will be given out as a dividend.

Some of the best dividend stocks I'd recommend are:

  • American Express (NYSE:AXP) - a reliable financial company, great as a long-term & safe investment
  • Realty Income (NYSE:O) - a huge company with a 4-5% dividend yield, somewhat volatile
  • Johnson & Johnson (NYSE:JNJ) - incredibly diverse healthcare brand and manufacturer of pharmaceuticals, medical devices, and vaccines.




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