Dividend investing has become one of the most famous and effective way to invest for the past 20 years. In fact, it has been proven many times that Dividend investing is a huge part of the stock market yield. Unfortunately, if you are a beginner investor, you are less likely to know what a dividend is and how dividend investing works. What is Dividend has been built for beginner investors who want to know how to successfully trade dividend stocks, dividend ETFs or dividend funds.
What is a Dividend?
A dividend is an amount of money paid by a corporation to its shareholders. Dividends are paid with after tax money. According to the financially theory, a corporation will issue a dividend when they can’t invest in a project that meets the shareholder investment return expectancies. Based on this premise, the corporation rather gives money back to its owner (e.g. the shareholder) through a dividend payout.
The shareholder can then use its dividend payout to invest it in another company that will meet his investment return expectancies.
If you want to invest and make profit over time, dividend investing can be a very interesting strategy. When you invest, your primary goal is to eventually sell what you bought (company shares, mutual funds, ETF, etc.) at a higher price than you paid. Basically, you are looking to make money with your investment.
If you hold regular company shares or mutual fund in your investment account, you must sell them to generate a profit. However, if you hold dividend paying company shares or dividend paying mutual funds, you will earn money while you are holding them in your investment account.
Therefore, you have 2 ways to make money when you do dividend investing:
#1 Earn capital gain by selling your investment at a higher price
#2 Receive dividend payouts while you are holding them in your investment account.
Is dividend investing different than “regular investing”?
Dividend investing is not really different than any other regular investing strategies. You can invest in several investment vehicles such as:
- Company shares (also called stocks)
- Mutual funds
- Exchange Traded Fund (ETF)
The only difference is that the titles you hold in your investment account are distributing a part of their profit to their owner (you!) overtime. However, dividend investors have a few more factors to consider before making their move.
One must look into dividend metrics such as:
Since you want to learn more about dividend, I suggest you start your investing journey through the following sections of this website (you can find them on the right column of any pages):
This should be your very first step before going everywhere else. This section is being updated as soon as we receive more questions from readers. It goes from the simplest question: “What is a Dividend” to dividend tax treatment questions. You will get a great overview of the site at the same time since we are refering to several articles that go more in depth.
You will then learn the basics of dividend investing before looking more in depth across the different categories of this site. You will understand how dividends are paid and how they are being processed when you hold dividend stock in your account.
(side bar links)
This section will introduce you to different dividend investing strategies. You will learn about how to select high dividend paying stocks and how to setup your investment portfolio.
If you are ready to get more advanced information, play with stock screeners, I suggest you take a look at the Dividend Resources Section. You will find several free investing tools and websites that will make you a better dividend investor.
If you are looking for dividend stock ideas, this is the place! We are making various high yield dividend stocks according to different criterias (countries, social responsible investment, dividend growth, etc.)
Remember, What is Dividend is not made to offer stock recommendations. This site has been built to help you understand how dividend investing works and to provide you with resources to trade dividend. The information found on this website is for educational purpose only.
If you may have any questions regarding dividend investing, please contact us at thefinancialblogger at gmail dot com.
I wish you a profitable investing journey!
image credit #2