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Dividend stocks are stocks that send you a sum of money (usually quarterly, but sometimes annually) simply for owning shares in the company.
To be clear, this money isn’t a capital gain, which you earn when share prices go up or when you sell the stock for profit. A dividend is more like a “bonus” that comes to you in the form of cash or more shares in the company’s stock.
Which companies have dividend stocks?
It’s important to note that not all companies pay out dividends. Dividend-paying companies are usually older, more established corporations that have a long track history of positive growth and expansion.
Usually when a company earns more money than it can reinvest in itself, it creates a dividend paying policy for shareholders. For that reason, you’ll rarely see growth companies, small caps, or start-ups issue dividends.