A dividend stock is one that accrues to the respective shareholders a part of the profits of the companies in which they have invested. Very often dividends are invested by the company itself.The receipts from the dividends are primarily paid in cash. The holders of dividend stocks do not receive the fullest part of the profits of the companies.
This happens as not all companies distribute the full amount of their profits to the shareholders.Some of the companies also provide dividend reinvestment plans. As per these plans the cash dividend received by the shareholders is appropriated in purchasing extra shares for them.
The dividend stocks have been useful sources of income for the shareholders of the corporate houses.
Highest Paying Dividend Stocks
The highest paying dividend stocks are a profitable option for the stockholders.
They pay the shareholders the maximum possible financial gains. Yet another feature of these investment options is that they are relatively risk free. The shareholders also derive considerable financial gain from the highest paying dividend stocks by selling them.
Dividend Payout Ratio
The dividend payout ratio is an important component of the dividend stocks. The term is employed to refer to the amount an investor would receive from his shares. The dividend payout ratio is determined by diving the total dividend by the earnings of the company. The dividend payout ratio is used to portray the financial conditions of respective companies.
Cash dividends are normally provided to the shareholders through checks or in cash, out of the profits accrued by the company. The preferred shareholders are eligible to receive the cash dividends earlier than the common shareholders.
The monthly dividends are accrued to the shareholders by the respective companies on each and every month. These are normally paid from the profits of these companies.