Dividends on stocks are a good way to increase one's financial liquidity. Though we cannot always predict how much amount we would be earning through stock dividends, they are certainly one of the reasons for entering the stock markets. Before we know of the best dividend paying stocks in 2011 and beyond, we need to understand the important points on which stock dividends depend. Here are these points explained one after the other.
Dividends are paid to shareholders of the company from the total profits generated during the year. So, naturally, the dividend given per share will be large if the profits are high. The board of directors finalizes the interim as well as final dividends for all the shareholders. As dividends are directly linked to the net profits, you should invest in firms having high net income. All companies cannot have high profitability as their business model might not be sustainable at all times of the economy. However, you need to select from sectors which are least affected by a slowdown, and have consistency in performance to gain handsome dividends.
Source: Buzzle
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