Dividend stocks are shares of companies that regularly give a portion of their earnings to shareholders

. These payments are a reward for investing in the company and are usually paid quarterly

. The amount is decided by the board of directors based on the company's most recent earnings

. Key aspects of dividend stocks:

• Payments Dividends are commonly paid in cash, but can also be issued as additional shares

• Payment Schedule Dividends are generally paid quarterly, but some companies pay annually, semi-annually, or monthly

• Dividend Yield A stock's dividend yield is the dividend paid per share, expressed as a percentage of the company's share price

. The average dividend yield of some top dividend stocks is around 12%

• Eligibility Common stock shareholders of dividend-paying companies are eligible to receive dividend payments as long as they own the stock before the ex-dividend date

• Consistency Companies with a steady track record of paying dividends are more attractive to investors

• Types of Companies Larger, well-established companies with a history of consistent profits are the most common dividend payers

. These companies are often in industries like utilities, consumer goods, and financial services

. Real Estate Investment Trusts (REITs) and Master Limited Partnerships (MLPs) are also required to distribute a significant portion of their income to shareholders as dividends

• Not all companies pay dividends Fast-growing companies, particularly in the technology and biotech sectors, often choose not to pay dividends and instead reinvest their profits into research, development, and expansion

• Other Types of Dividends Besides cash dividends, dividends can also come in the form of additional shares (stock dividends) or as a one-time payout when the company has excess cash (special dividends)

. Many companies and brokers also offer dividend reinvestment plans (DRIPs), which allow shareholders to automatically reinvest their dividends into more shares of the company