When a company pays you a certain amount of cash per share that you own, that’s a dividend. You can find investments that pay dividends by investing in dividend paying stocks, mutual funds that have a dividend strategy objective or even ETFs also known as Exchange Traded Funds that have a Dividend Strategy.
For example, if you decide to buy $10,000 of a stock and it paid a 3% dividend yield, you would get $300 a year just for owning it.
Many people that invest in dividend paying stocks like to take advantage of these steady dividend payments. You will have the option to reinvest the dividends to purchase additional shares of stock or accumulate cash from these dividends. Some people use the dividend payment as income when retired.
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Catherine Magaña is a CFP or Certified Financial Planner in Carlsbad California. If you would like to set up a time to discuss your financial goals she can be reached at 760-692-5700 or email@example.com.