What is a Dividend Stock?
A dividend stock, in simple words, is a stock that pays a dividend on a regular schedule. The schedule can be annual, semi-annual, quarterly or monthly. A dividend represents cash returned to investors which technically reduces the value of the company by the amount of dividend paid. In practice, with the stock price trading up and down during the day, it rarely settles that way.
The dividend yield is calculated by dividing the total annual dividend by the stock price. Typically, each sector will tend to have a dividend yield pattern that you should be familiar with.