How To Guide For: A Look At Dividend Investing And The Pros & Cons

Dividend investing focuses on selecting solid companies that pay a regular and growing dividend. It is an investment approach of purchasing stocks that issue dividends in an effort to generate a steady stream of passive income. The way it works is each quarter, on the dividend declaration date, a firm’s board of directors declares the dividend amount that will be distributed to the firm’s shareholders.

Only the shareholders who owned the stock on the date that the firm reviews its lists to determine the shareholders of record, receive a dividend. Companies distribute cash dividends to their shareholders periodically during their fiscal year, but most issue them on a quarterly basis. Dividend investors are interested in a firm’s dividend payout ratio and dividend yield. So now that we know what the term dividend investing means lets take a look at the pros and cons. Lets start with dividend stocks-- the benefits are are when the share value rises and when the company cuts the shareholder a dividend check, paying the shareholder a portion of its profits. Disadvantages to dividend stock is that share prices can drop whether the stock pays dividends or not. Also companies can slash or eliminate their dividend payments at any time for any reason. To learn more about dividend investing and the pros and cons click the pictures below to read the articles.