How dividend investing generates income
Dividends are cash payments made to shareholders, typically quarterly. High-quality dividend-paying companies have historically raised dividends annually, growing your income each year. Reinvesting dividends (DRIP) compounds growth significantly over time.
What is dividend yield?
Dividend yield = annual dividend per share ÷ stock price × 100. It measures the income return from dividends relative to the investment.
What is a good dividend yield?
A yield of 2%–5% is generally considered healthy. Very high yields (above 6–7%) may signal financial stress or dividend cuts.
What is DRIP investing?
Dividend Reinvestment Plan — automatically using dividends to buy more shares. Over decades, DRIP dramatically amplifies total returns.