About us

About us

Based out of Auckland, New Zealand, we bring an institutional trading experience to the retail market.
Mark O' Donnell
 · 
Research Analyst
September 26, 2022
 · 

What are dividend stocks?

  • Dividends are payments a company makes to return value to its shareholders
  • Dividends are more likely to be paid by well-established companies

Dividend stocks are publicly listed companies that pay out regular dividends. 

Dividends are payments a company makes to return value to its shareholders. A dividend is paid per share and typically made on several occasions over a fiscal year. So, if you own 10 shares in Apple Inc and they pay a $1.00 dividend twice per year, you will receive $20 annually. 

Dividends are more likely to be paid by well-established companies, rather than those that are still growing. As such, technology and other high-growth companies rarely pay dividends because they need to reinvest their profits into fueling its growth. 

Dividend payments indicate a company's financial well-being, and the share price can rise and fall depending on whether a dividend increases or decreases.  

Companies can pay several different types of dividends: 

  • Cash dividends.  
  • Cash Dividends are the most common type of dividend. Companies pay these in cash directly to shareholders. 
  • Stock dividends.  
  • In leu of paying cash, a company may opt to pay investors with additional shares of stock. 
  • Dividend reinvestment programs (DRIPs). 
  • Investors in Dividend reinvestment programs reinvest any cash dividends back into the company's stock immediately, often at a discounted price. 
  • Special dividends.   
  • These dividends are typically additional to the regular dividends that a company pays out. A company often issues a special dividend when they accumulate cash they do not need or when they generate windfall profits. 
  • Preferred dividends.  
  • Preferred dividends are issued to owners of preferred stock. Preferred stock is a type of stock that functions like a stock and a bond. Dividends are usually paid quarterly, but unlike dividends on common stock, dividends on preferred stock can be fixed and will take preference over dividend payments to common stockholders. 
Trade with an award-winning broker
Start trading in less than 5 minutes