This description provides an overview of investing in dividend-paying stocks. Dividend-paying stocks are stocks that pay out a portion of their profits to shareholders as dividends. These dividends can provide a steady stream of income, as well as the potential for long-term capital appreciation. Investing
A dividend is the distribution of profits by a corporation to its shareholders. When a corporation earns a profit or surplus, it is able to pay a portion of the profit as a dividend to shareholders. Any amount not distributed is taken to be re-invested in the business. The current year's profit as well as the retained earnings of previous years are available for distribution; a corporation is usually prohibited from paying a dividend out of its capital. Distribution to shareholders may be in cash or, if the corporation has a dividend reinvestment plan, the amount can be paid by the issue of further shares or by share repurchase. In some cases, the distribution may be of assets.