What are dividends? A dividend is the distribution of some of a company’s profits or earnings to its shareholders. Dividends are generally paid out on a regularly scheduled basis, this typically happens quarterly. Not all companies pay dividends though so this is something important to look out for in the stocks your choose to invest in.
Companies that pay dividends are usually the larger, more established companies with more predictable profits. These companies are often in the banking, utilities, or oil and gas industries. Because growth is generally slower in these industries compared to the technology or biotech sectors, they use dividends as a way to attract investors. Dividend payments vary in amount from company to company, they can even vary in the same company but they are usually between 1%-5%.
Choosing a dividend stock can be tricky because you want to balance a good dividend yield with a strong company that has a stock price that could still potentially rise in value. Chevron (CVX) is one of the best value dividend stocks because of it has a long history of dividend growth. Chevron currently offers a dividend yield of 5.11%. The pharmaceutical company AbbVie (ABBV) has 8 successive years of dividend growth with a dividend yield of 4.73%. Verizon (VZ) has a dividend yield of 4.38% and it has raised dividends in the past 8 straight years.
What are your thoughts on dividends? Do they help influence you to choose a certain stock to invest in? Leave me a comment and let me know your thoughts on dividends. Don’t forget to follow my blog so you can stay up to date on the latest investing news.