We’re examining stocks that pay cash dividends to stockholders. Dividend payments are distributed to shareholders when a corporation generates profits or has a cash surplus. Some companies make regularly scheduled dividend payments. Others provide stockholders with the dividend bonus on a more sporadic basis. The amount of the dividend depends entirely on the financial situation of the corporation.
No matter how often they are distributed, dividends can help improve most investor’s portfolios. There are a number of reasons to consider dividend paying stocks. Stocks that pay dividends can help generate cash flow, which can be used for living expenses or reinvested to increase the overall gains in your portfolio. Dividend payments can also help to blunt the impact of a market in which stock values and capital gains aren’t appreciating quickly. Another advantage of dividends is that they have a tax advantage over ordinary income. Dividends allow you to realize returns from your investment, while retaining ownership of the company’s shares (and any future stock price gains).
Source: PennLive.com
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