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BeginnerUS Stocks

US Dividend Investing: Building a Passive Income Stream

Dividend investing means buying stocks that pay regular cash distributions. Over time, reinvesting dividends can account for a large portion of total returns — the "secret" behind S&P 500 long-term compounding.

TL;DR

Dividend investing means buying stocks that pay regular cash distributions. Over time, reinvesting dividends can account for a large portion of total returns — the "secret" behind S&P 500 long-term compounding.

How Dividends Work

Companies distribute a portion of profits to shareholders, typically quarterly. If you own 100 shares of a stock paying $2/share/year, you receive $200 annually — regardless of price movements. Dividend yield = annual dividend ÷ stock price.

Key Terms:

dividend yieldex-dividend datequarterly distribution