Dividends

Dividends are a way for companies to pay out a portion of their earning to their employees. They provide an income to share holders. Unlike covered calls they provide no risk of losing the stock every time the payment is received. However, the payment will usually be a lot less than a covered call income. The average dividends will normally pay around 5% of the stock’s value in a year.

Dividends can either be paid out in cash in a form of a check, stocks in a form of more shares, or property in the form of product or other assets. They are normally paid with cash. Only a few companies will pay out in the form of more shares or property.

Be careful with your stock picks. Many new investors will look for a stock that gives them a nice big payment every month. A lot of the time, they will buy stock that is falling hard just for that income. Remember, it is not worth getting 5% gain in Dividends if the stock falls down 50%. Your number 1 goal should be to find and trade good quality stocks. How much money a company will pay you every month comes 2nd.