Beginner's Guide to Dividend Investing
What company does the ticker symbol MCD represent?
Hi, my name is Jon and I'm an independent investor in Kansas City and today I am going to share with you a beginner's guide to dividend investing, on About.com.A great way to build wealth by investing in stocks is through dividend investing.A dividend is a cash distribution to its shareholders. As a company makes a profit they decided to share that profit to those that own their stock. The portion that they share to an investor is called a dividend. Not all stocks pay dividends, so you will have to first find out what stocks pay a dividend. To see if a stock pays a dividend, simply enter the ticker symbol of a stock on a quote screen on pretty much any investing website. There are two things to look at to see if a stock pays dividends. The annual dividend pay out per share and the dividend yield. The annual dividend payout per share shows how much in dividends the company pays out per share over a years time. For example, McDonald's, ticker symbol MCD, pays out $3.08 as a dividend per share. so if you own 100 shares your annual pay out will be $308. The second thing to look at is the dividend yield that is showed as a percentage. A dividend yield is the annual dividend pay out, per share, divided by the current price of the stock. For example, is McDonald's pays out $3 per share yearly in dividends and the stock price is $90. The the dividend yield would be 3 divided by 90, which is 3.33%. So if you invested $10,000 you would expect to receive $333.Dividends are usually paid in cash and automatically deposited into your investment account. Dividends are usually split into quarterly payments so it would be deposited 4 times a year on those particular distribution dates. Always manage your risk when investing, because companies can change the amount the pay in dividends based on how well they did. So look at the size of the dividend, the growth of the company and the long term pay out in dividends they have made, and the stability of the company. Thanks for watching and for more information on stocks and investing, be sure to check us out on the web at About.com.