A Beginner's Guide to Dividends

When you buy a share of a company, you become a part-owner. If that company does well and has extra profit, it can choose to share some of that profit with its owners—the shareholders. That cash payment, sent directly to your brokerage account, is a dividend. It's a direct reward for being an investor in a successful business.

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Fun Fact: You've Probably Used a Dividend Company Today

Dividend-paying companies aren't obscure financial firms; they are often the bedrock of the American economy. These are brands you know and trust. For example:

• The Coca-Cola Company (KO) has paid a dividend to its shareholders every year since 1893.
• McDonald's (MCD) has raised its dividend every single year since it started paying one in 1976.
• Johnson & Johnson (JNJ), a healthcare giant, has increased its dividend for over 60 consecutive years.
• Apple (AAPL), despite being known for its growth, also pays a substantial dividend to its investors every quarter.

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Watch and Learn: Dividends Explained

Sometimes, seeing is believing. Here are a few excellent videos from trusted sources that break down the concept of dividends in just a few minutes.

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Want to Dig Deeper?

If you're ready to learn more about dividend investing strategies, here are some of the best resources on the web:

• Investopedia - An incredible resource for all financial terms.
• NerdWallet - Known for its clear, easy-to-understand articles.
• Charles Schwab Learning Center - In-depth articles from a major brokerage.