When deciding to invest in companies, choose companies that make money for their shareholders. Some companies reinvest their profits in the company themselves, some acquire smaller companies and some companies pay dividends. A dividend is a payment made to a shareholder of a company, the shareholder is paid a portion of the company's earnings in proportion to the amount of stock they own. Its like the interest earned on your savings account at the bank.
Dividend investing is all about income generation. By purchasing stocks in a dividend-paying company, you have invested in something that is making money. Dividend stocks are attractive for investors who make a living off of their investments. Instead of buying and selling stocks with the goal of making capital gains, dividend investors can count on receiving payments every few months (dividends are generally paid quarterly). However, not all stocks pay dividends, and not all stocks which pay dividends are worth owning, so do your research. Keep in mind that public companies have to announce their financial information, so this information will be readily available to you.
Source: Jamaicaobserver.com
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