Schwab Login

  • Home
  • About
    • GET STARTED:
      CONTACT US TODAY
      • Calendar
    • Team
    • Our Mission
    • What Matters Most
    • Community
      • Seattle Children’s Hospital
      • Mercer Island Schools Foundation
      • Mercer Island Chamber of Commerce
    • Glossary
  • Services
    • Retirement
    • Estate
    • Investment
    • Insurance
    • Money
    • Lifestyle
  • Onboarding
  • Calculators
  • Schwab Login
  • Financial Insights
Get Started
Schwab Login

  • Home
  • About
    • GET STARTED:
      CONTACT US TODAY
      • Calendar
    • Team
    • Our Mission
    • What Matters Most
    • Community
      • Seattle Children’s Hospital
      • Mercer Island Schools Foundation
      • Mercer Island Chamber of Commerce
    • Glossary
  • Services
    • Retirement
    • Estate
    • Investment
    • Insurance
    • Money
    • Lifestyle
  • Onboarding
  • Calculators
  • Schwab Login
  • Financial Insights
Get Started

  • Home
  • About
    • GET STARTED:
      CONTACT US TODAY
      • Calendar
    • Team
    • Our Mission
    • What Matters Most
    • Community
      • Seattle Children’s Hospital
      • Mercer Island Schools Foundation
      • Mercer Island Chamber of Commerce
    • Glossary
  • Services
    • Retirement
    • Estate
    • Investment
    • Insurance
    • Money
    • Lifestyle
  • Onboarding
  • Calculators
  • Schwab Login
  • Financial Insights

A Primer on Dividends

  • Home
  • Blog
  • Investment
  • A Primer on Dividends
How the Federal Reserve Works
April 21, 2022
Asset Allocation
April 21, 2022
Published by Tyson Farmer on April 21, 2022
Categories
  • Investment
  • Investment-Articles
Tags
INVESTMENTREAD TIME: 3 MIN
When interest rates reach historic lows, some investors turn to dividend-yielding stocks when in search of income-generating investments.

When a company makes a profit, that money can be put to two uses:

  1. It can be reinvested in the business.
  2. It can be paid out to the company’s shareholders in the form of a dividend, a taxable disbursement typically made quarterly or monthly.

Dividend Ratios

Investors track dividend-yielding stocks by examining a pair of ratios.

Dividend per share measures how much cash an investor is scheduled to receive for each share of dividend-yielding stock. It is calculated by adding up the total dividends paid out over a year (not including special dividends) and dividing by the number of shares of stock that are outstanding.

Dividend yield measures how much cash an investor is scheduled to receive for each dollar invested in a dividend-yielding stock. It is calculated by dividing the dividends per share by the share price.

Other Dividend Considerations

Investing in dividend-paying stocks can create a stream of taxable income. But the fact that a company is paying dividends is only one factor to consider when choosing a stock investment.

Dividends can be stopped, increased, or decreased at any time. Unlike interest from a corporate bond, which is normally a set amount determined and approved by a company’s board of directors. If a company is experiencing financial difficulties, its board may reduce or eliminate its dividend for a period of time. If a company is outperforming expectations, it may boost its dividend or pay shareholders a special one-time payout.

When considering a dividend-yielding stock, focus first on the company’s cash position. Companies with a strong cash position may be able to pay their scheduled dividend without interruption. Many mature, profitable companies are in a position to offer regular dividends to shareholders as a way to attract investors to the stock.

Qualified dividends are taxed at a maximum rate of 20%. Ordinary dividends are taxed at the same rate as federal income taxes, or between 10% and 37%. State income taxes also may apply.

Be cautious when considering investments that pay a high dividend. While past history cannot predict future performance, companies with established histories of consistent dividend payment may be more likely to continue that performance in the future.

In a period of low interest rates, investors who want income may want to consider all their options. Dividend-yielding stocks can generate taxable income, but like most investments, they should be carefully reviewed before you commit any dollars.

Keep in mind that the return and principal value of stock prices will fluctuate as market conditions change. And shares, when sold, may be worth more or less than their original cost.

The information in this article is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2022 FMG Suite.

Share
0

    Have A Question About This Topic?



    Related posts

    investment strategies for retirement
    December 13, 2023

    Investment Strategies from Young Adulthood to Retirement


    Read more
    Why I Became a Financial Advisor
    June 30, 2022

    Why I Became a Financial Advisor


    Read more
    Emerging Market Opportunities Video Thumbnail
    April 26, 2022

    Emerging Market Opportunities


    Read more

    Lorem ipsum dolor sit amet,
    consectetur adipiscing elit, sed
    do eiusmod tempor incididunt ut
    labore.

    About Us
    • Team
    • Our Mission
    • What Matters Most
    • Services
    • Useful Links
    • Articles
    • Presentations
    • Calculators
    • Videos
    Resource Center
    • Retirement
    • Estate
    • Investment
    • Insurance
    • Money
    • Lifestyle
    CONTACT INFORMATION

    [email protected]

    (206) 883-8342

    Mercer Island Office
    P.O. Box 158

    disclosure

    Check the background of your financial professional on FINRA's BrokerCheck.

    The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named representative, broker - dealer, state - or SEC - registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

    We take protecting your data and privacy very seriously. As of January 1, 2020 the California Consumer Privacy Act (CCPA) suggests the following link as an extra measure to safeguard your data: Do not sell my personal information.

    Copyright 2022 FMG Suite.

    Vega Financial LLC (”VF”) is a registered investment advisor offering advisory services in the state of WA and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The information on this site is not intended as tax, accounting or legal advice, as an offer or solicitation of an offer to buy or
    sell, or as an endorsement of any company, security, fund, or other securities or non-securities offering.

    This information should not be relied upon as the sole factor in an investment making decision. Past performance is no indication of future results. Investment in securities involves significant risk and has the potential for partial or

    complete loss of funds invested. It should not be assumed that any recommendations made will be profitable
    or equal any performance noted on this site. The information on this site is provided “AS IS” and without warranties of any kind either express or implied. To the fullest extent permissible pursuant to applicable
    laws, Vega Financial disclaims all warranties, express or implied, including, but not limited to, implied warranties of merchantability, non-infringement, and suitability for a particular purpose. (VF) does not warrant that the information on this site will be free from error. Your use of the information is at your sole risk. Under no circumstances shall (VF) be liable for any direct, indirect, special or consequential damages that result from the use of, or the inability to use, the information provided on this site, even if (VF) or a (VF) authorized representative

    has been advised of the possibility of such damages, information contained on this site should not be considered a solicitation to buy, an offer to sell, or a recommendation of any security in any jurisdiction where such offer, solicitation, or recommendation would be unlawful or unauthorized.

    © 2022 vega-financial.com. All rights reserved