How do stock yields work

Stock Market Basics. Stock Market. Industries to Invest In. Getting Started. Planning for Retirement. Retired: What Now? Personal Finance. Credit Cards. About Us. Who Is the Motley Fool? Fool Podcasts. New Ventures. Search Search:. Updated: Jul 5, at PM. A Fool since , he began contributing to Fool. Trying to invest better? Like learning about companies with great or really bad stories?

While dividend payouts can be routine or circumstance-specific, a company's aim in making dividend payments is usually always the same -- to return to shareholders any excess profits that are not needed for the business. Discounted offers are only available to new members. Stock Advisor will renew at the then current list price.

Average returns of all recommendations since inception. Cost basis and return based on previous market day close. Investing Best Accounts. Stock Market Basics. Stock Market. Industries to Invest In. Getting Started. Planning for Retirement. Retired: What Now? Personal Finance. Credit Cards.

About Us. Who Is the Motley Fool? Fool Podcasts. Some dividend investors love them. Finally, some companies manipulate their growth costs, at least temporarily, to lure investors. A good dividend yield can be a good measure when evaluating stocks for investment purposes.

But it doesn't always mean a strong company. Look beyond the number at just one moment in time and be sure to look at the industry and the company's dividend yield over an extended period.

You want to know there's some consistency and it's not just a one-time fluke. There are two ways to make money from investing, income and capital gains. Dividends represent the income side of that equation. The higher the dividend yield, the more income you will receive for each dollar you invest. Dividend yields may spike after a stock market decline, but if the market decline reflects fundamental economic issues, then a company will likely reduce its dividends and bring the yield back into a normal range.

The ex-dividend date is the date by which you must own stock to receive a dividend. When a company announces a dividend, it will also set an ex-dividend date. If you sell the stock before the ex-dividend date, you will not receive the dividend payment. Qualified dividends refer to the tax treatment of certain dividends. Qualified dividends are taxed at a lower rate than regular dividends, similar to how long-term capital gains are taxed at a lower rate than short-term gains.

Qualified dividends typically apply to U. Some foreign companies may also qualify. Corporate Finance Institute.

Financial Industry Regulatory Authority. Heartland Advisors. Securities and Exchange Commission. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance.