In Graphics: What Are Dividends?

I enjoy the stock market as much as the next guy, I suppose. I like the idea of purchasing and owning a piece of a company. Every year I get to vote in the annual shareholders' meeting and I get to collect dividends on certain stocks. Dividends are similar to interest on savings, but that's not quite right. Dividends will vary with the performance of the company and value of the stock, so be sure to do your homework, stick with your strategy before jumping into a high-yield dividend stock.

I really like dividend stocks because they can offset losses over time if the stock goes down. Also, I think it's fun to save up the dividends to reinvest and purchase more of the same to create a feedback loop. In some cases this can be done automatically. It's called a DRIP (Dividend ReInvestment Plan). My money making mo' money!

In Graphics: What Are Dividends?

via MintLife Blog | Personal Finance News & Advice by Ross Crooks on 10/22/10

To make studying the fundamentals of investing fun, we recently kicked of a series of infographics explaining basic concepts (See: What Is a Stock?). Now let's move on to something that many investors — beginner and advanced alike — actually consider not only important, but even sexy: dividends.
Dividends aren't that difficult to understand: they're a part of the earnings of a company that is paid out to shareholders. Shareholders love them because, unlike a stock's price, dividends provide a more stable income stream. But as with anything in the investing word, they're neither 100% guaranteed, nor that simple.