DividendChannel.com
What is a Dividend?
Dividend Channel Staff

Often times, a company will reward its shareholders by paying out a portion of its profits in the form of a dividend rather than retaining those earnings for investment in the company. For publicly traded companies, dividends are usually paid on a fixed schedule (monthly, quarterly, semi-annually and annually) and the total amount you receive is based on the number of shares you own prior to the record date. Furthermore, the dividend can be paid in cash or re-invested back into the company through a Dividend Re-Investment Plan (DRIP) — sometimes at a discount to the current stock price if the company offers that kind of plan (otherwise, your brokerage will just make an open-market purchase using the cash you received).

In certain cases, a company may choose to pay a stock dividend, i.e. instead of cash some or all of the dividend may be paid by issuing new shares. This allows the company to hold onto its cash, but depending on the tax characteristics of the dividend shareholders may owe taxes to the government on that income, even though no actual cash was received. During the height of the financial crisis, many Real Estate Investment Trusts (REITs) and Business Development Companies (BDCs) made dividend payments in stock rather than cash, because both of those types of companies are required to pay out most of their earnings to shareholders in the form of dividends.

Dividends are also important in valuing a company's stock. Finance professor Myron Gordon popularized an approach known as the ''Dividend Discount Model'' in his book ''The Investment, Financing and Valuation of the Corporation.'' This approach looks at the current dividend and expected future dividends anticipated to be paid in the future, and combines the current value of all that combined cash. Because a dollar in hand today is worth more than a future dollar (things tend to cost more in the future on account of inflation), the future expected payments are ''discounted'' in the calculation (hence the term Dividend Discount Model).

A company whose dividend payments tend to go up over time, keeping up with (or surpassing) the rate of inflation, should tend to be more attractive and interesting for dividend investors to consider. That's why at Dividend Channel we pay particular attention to dividend history, dividend yield, book value, and quarterly earnings (only profitable companies can afford to pay dividends) when we calculate our DividendRank as part of our dividend stock screener where we screen through our entire coverage universe of dividend paying stocks, and come up with certain calculations about profitability and about the stock's valuation (whether we think it looks ''cheap'' or ''expensive''). The coverage universe is then ranked based upon our proprietary criteria, and the result is a list of the top most ''interesting'' stocks at any particular time — a unique research tool for use by dividend investors.

Warren Buffett Dividend Stocks
Best Dividend Stocks 2004-2024
Dividend Growth Stocks: 25 Aristocrats
Future Dividend Aristocrats: Close Contenders
The Top 10 DividendRank'ed Stocks
Decades of Increasing Payments: 25 S.A.F.E. Dividend Stocks
Best High Dividend Stocks 2004-2024
The DividendRank Top 25
The Top 10 DividendRank'ed DJIA Components
Feel-Good Income: 25 Socially Responsible Dividend Stocks
Top Dividend Stocks 2014-2024
The Top 10 DividendRank'ed Dow Transports Components
The Top 10 DividendRank'ed Dow Utilities Components
The Top 10 DividendRank'ed Nasdaq 100 Components
Best High Yield Stocks 2014-2024
10 Stocks Going Ex-Dividend
10 Oversold Dividend Stocks
10 High Yield Baby Bonds
10 Stocks Where Yields Got More Juicy
10 Dividend Bargains You Can Buy Cheaper Than Insiders Did
Top Ranked Dividend Stocks With Insider Buying
Top Dividend Stocks 2019-2024
Best Dividend Stocks Analysts Like in the S&P
Best Dividend Paying Stocks Analysts Like in the Dow
10 Cheap Dividend Stocks Under $10
10 Low Priced Dividend Stocks Under $5
Top High Dividend Yield Stocks 2019-2024
Broker Darlings: Top 15 Analyst Picks of the Dow
Top 25 Broker Analyst Picks of the S&P 500
Forgotten S&P 500 Giants: Analysts' Current Least Favorites
10 ETFs With Stocks That Insiders Are Buying
25 Dividend Giants Widely Held By ETFs
10 Energy Stocks You Can Buy Cheaper Than Insiders Did
Cheap Energy Stocks Paying Dividends
Cheap Oil Stocks Paying Dividends
10 Metals Stocks You Can Buy Cheaper Than Insiders Did
10 Oversold Metals Stocks
10 Must-Know High-Yield REITs
10 Top DividendRank'ed Financials
10 Top DividendRank'ed Metals Stocks
10 Oversold Energy Stocks
10 Top DividendRank'ed Energy Stocks
10 Top DividendRank'ed Utility Stocks
10 Stocks Crossing Below Book Value
10 Stocks Crossing Above Their 200 Day Moving Average
10 Stocks Crossing Below Their 200 Day Moving Average
10 Dividend Stocks Crossing Above Their 200 DMA
10 Dividend Stocks Crossing Below Their 200 DMA
10 Top Covered Call ETFs
The 10 Biggest ETFs
The 10 Best ETF Performers
The 10 Worst ETF Performers
10 ETFs With Notable Inflows
10 ETFs With Notable Outflows
Top 10 Analyst Rated Consumer Stocks
Top 10 Analyst Rated Dividend Stocks
Top 10 Analyst Rated Energy Stocks
Warren Buffett Energy Stocks
Top 10 Analyst Rated Financial Stocks
Warren Buffett Bank Stocks
Top 10 Analyst Rated Healthcare Stocks
Top 10 Analyst Rated REIT Stocks
Top 10 Analyst Rated Technology Stocks
Warren Buffett Technology Stocks
The Top 10 DividendRank'ed Canadian Stocks
The DividendRank Canada Top 25
10 Canadian Stocks Going Ex-Dividend
10 Oversold Canadian Stocks
10 Canadian Stocks Where Yields Got More Juicy
10 Must-Know High-Yield Canadian Real Estate Stocks
10 Top DividendRank'ed Canadian Financials
10 Must-Know High-Yield Canadian Energy Stocks
10 Canadian Stocks Crossing Below Book Value
10 Canadian Stocks Crossing Above Their 200 Day Moving Avg
10 Canadian Stocks Crossing Below Their 200 Day Moving Avg
Stock market game
Rank Symbol Dividend Yield* 
#1 MFIN Q 0.4 5.22% 
#2 CPG Q 0.46 5.92% 
#3 PNNT M 0.84 12.59% 
#4 PK Q 1 5.84% 
#5 FISI Q 1.2 6.48% 
See More Top Ranked Dividend Stocks »

*updated Monday, March 18, 2:00 AM Yield calculations vary and may not be reliable nor comparable. Not all publicly traded securities are ranked; data may be incorrect or out of date. Rankings are for informational purposes only and do not constitute investment advice. Full disclaimer
Rank Symbol Dividend Yield* 
#1 MFIN Q 0.4 5.22% 
#2 CPG Q 0.46 5.92% 
#3 PNNT M 0.84 12.59% 
#4 PK Q 1 5.84% 
#5 FISI Q 1.2 6.48% 
See More Top Ranked Dividend Stocks »

*updated Monday, March 18, 2:00 AM Yield calculations vary and may not be reliable nor comparable. Not all publicly traded securities are ranked; data may be incorrect or out of date. Rankings are for informational purposes only and do not constitute investment advice. Full disclaimer

What is a Dividend? | Dividend Channel | www.DividendChannel.com

Copyright © 2010 - 2024, All Rights Reserved Nothing in Dividend Channel is intended to be investment advice, nor does it represent the opinion of, counsel from, or recommendations by BNK Invest Inc. or any of its affiliates, subsidiaries or partners. None of the information contained herein constitutes a recommendation that any particular security, portfolio, transaction, or investment strategy is suitable for any specific person. All viewers agree that under no circumstances will BNK Invest, Inc,. its subsidiaries, partners, officers, employees, affiliates, or agents be held liable for any loss or damage caused by your reliance on information obtained. By visiting, using or viewing this site, you agree to the following Full Disclaimer & Terms of Use and Privacy Policy. Video widget and dividend videos powered by Market News Video. Quote data delayed at least 20 minutes; data powered by Ticker Technologies, and Mergent. Contact Dividend Channel; Meet Our Editorial Staff.