Skip to main content Skip to main content
Not investment advice. Educational reading. See Disclaimer.
L.7 · BEGINNER · 2 MIN

Dividends: Getting Paid to Own Stocks

Dividends are cash payments companies make to shareholders, usually quarterly. Not all companies pay them, but those that do share profits directly with you.

Quiz · 5 questions ↓
§ 01
JNJ — Dividend Yield, Current Price. Open JNJ on the Ledge to see current values.
§ 02
Dividend Yield = Annual Dividend / Stock Price
§ 03
TypeGrowthYieldExample
Growth stocksHighLow or 0%Tech companies reinvest profits
Dividend stocksModerate2-4%Utilities, consumer staples
REITsLow-moderate4-8%+Required to distribute 90% of income
§ 04
Look up JNJ and find the **dividend yield** in the key metrics.
§ 05

Dividends provide income regardless of stock price movement. A 3% yield means you earn $3 per year for every $100 invested, even if the stock goes nowhere.

§ 06
Company A pays a $1/year dividend and trades at $50. Company B pays no dividend but trades at $50. You have $5,000 to invest. Which is the better investment?
Five questions · AI feedback

Sit with the ideas.

Company A pays a $2.00 annual dividend and trades at $100. Company B pays $4.00 and trades at $50. Which has the higher dividend yield?

Why:

Other lessons in this course.

  1. 01What Is a Stock?
  2. 02How Stock Exchanges Work
  3. 03Sectors: How the Stock Market Is Organized
  4. 04Market Cap: Small, Mid, and Large
  5. 05Dilution: When Your Slice of the Company Shrinks
  6. 06What Moves Stock Prices?
  7. 07Dividends: Getting Paid to Own Stocks— reading now
  8. 08Bulls, Bears, and Market Cycles
  9. 09Reading a Stock Chart
See it on a real ticker →