Making the Most of Your Dividends

If you’ve been investing for a while, you probably know these three things about dividends: Seeking out stocks that pay significant dividends can help make you rich. Choosing dividend-paying companies that have increased their dividend payouts significantly in the past is even better. Dividend yields rise when stock prices fall, and vice versa. (The dividend yield is calculated by dividing a company’s annual dividend by its current stock price. It’s a simple fraction, with the dividend on top and the stock price on the bottom. So, as the stock price falls, the yield becomes bigger, and as the price rises, the yield shrinks.) We may know these things, but we don’t always consider them as a whole. We may get excited by a stock with a steep dividend yield, for example, but fail to look into its history of increasing that dividend. That oversight could be a mistake.... Read more