If the company has a payout ratio that is too high, say over 60% - then it may be stretching too far to make the dividend payment. As an investor, you want to look for a dividend that has a payout ratio, ideally, below 50%. The payout ratio is the percentage of earnings that go toward the dividend. In addition to the yield, you also want to watch the payout ratio. Now, you could take that money and put into your bank account, or you could reinvest it back into the stock, growing your position. So, if you owned 50 shares, you would have $102 per year in dividend payments.
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For a full year, a $0.51 per-quarter dividend would come out to $2.04 per share per year.
If you own 50 shares of Citigroup, that dividend would result in a $25.50 dividend payout per quarter. A 3.98% yield results in a dividend of $0.51 per share each quarter, based on its current $51 share price. Right now, a lot of banks are paying high dividends, including Citigroup, which has a 3.98% yield. A dividend yield over 3% is generally considered a fairly high dividend. The average dividend yield on the S&P 500 is currently about 1.69% - so anything over that would be considered pretty good. But the percentage is far lower among mid-cap and small-cap stocks.Īnd among those stocks that pay dividends, not all offer great yields - which is the percentage of a company's share price that it pays to dividends annually. Not all large companies pay dividends roughly 400 of the S&P 500 stocks distribute them. Most dividend payers are large, established companies with a history of solid earnings, as dividends are paid out of a company's earnings. What are dividend stocks?ĭividend stocks are those that distribute a quarterly, or sometimes monthly, payout, or dividend, to investors. Why dividend stocks and why now? For starters, in a market that's down some 13% year to date, they are stocks that pay you to own them. It was by far the most of any investment type, as mega-cap technology stocks were second at 18% followed by financials at 16%. If you follow the lead of many Wall Street investors - including portfolio managers, equity strategists, chief investment officers, and other experts - then you might want to consider adding some dividend stocks to your portfolio.Ī decent CNBC survey of 500 Wall Street investors revealed that 42% are most likely to buy dividend stocks right now, given the sluggish state of the market.
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