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Dividend stocks, explained.

Dividend stocks are simply stocks that pay you a regular cash payout. Many companies offer dividends, but you’ll usually find them more often in older, established companies that don’t need all their money for growth.

Dividend stocks are popular among older investors because they provide a steady income. The best ones increase their dividend payments over time, allowing you to earn more compared to fixed payouts from bonds.

Are dividend stocks right for you? If you’re a long-term investor who prefers lower risks and desires regular cash payments, they could be a good fit.

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Let’s consider Procter & Gamble Co as an example of a dividend stock. Their annual dividend yield is 2.41%. If you invested $200 a year ago, your profit would be:

Capital Gain: ($200 / $141.95) * $156.25 = $220

Dividend interest: $200 * 2.41% = $4.82

Selling your stock would give you an overall profit of about $25, which is a decent return on a $200 investment! Generally, investing in dividend stocks is similar to bonds; you wait for a few years while enjoying the dividend interest.

Here are more examples of established companies with their annual dividend yields (updated as of Aug 2, 2023):

  • Johnson & Johnson (JNJ): A multinational healthcare company known for its stability and consistent dividend payments. Annual Dividend Yield: 2.75%
  • Procter & Gamble (PG): A consumer goods company manufacturing a wide range of products. Annual Dividend Yield: 2.40%
  • Coca-Cola (KO): A renowned beverage company with a long history of paying dividends.Annual Dividend Yield: 3.01%
  • AT&T Inc. (T): A telecommunications giant known for its high dividend yield. Annual Dividend Yield: 7.92%
  • Apple Inc. (AAPL): An iconic technology company consistently increasing its dividends. Annual Dividend Yield: 0.54%
  • Pfizer Inc. (PFE): A global pharmaceutical company known for its dividend stability. Annual Dividend Yield: 4.60%

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Happy Investing!

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