When considering the purchase of common stock in a company, an investor must consider many factors. These factors include the present price of the stock, its history, its future prospects and whether or not the stock pays a dividend. Some investors overlook the importance of stock dividends as a significant part of the total return of an investment.Stock dividends are payments made to
. stockholders of record by the management of the company. They are a share of the profits of the firm after taxes, generally paid as a fixed amount per share. Dividends can also be paid in the form of additional shares in the company, or applied to a dividend reinvestment plan that also results in additional shares for the stockholder.Any dividend to be paid must first be approved by the Board of Directors of the company. The Board designates the date on which the dividend will be paid, and its amount. They also determine the in-dividend date, the last day of trading during which people who buy the stock will receive the dividend, as well as the ex-dividend date, when new shareholders are not entitled to receive the dividend. Dividends are treated as taxable income in most circumstances, although the tax rate is lower than that of regular income.Investors who wish to consider stocks that pay dividends have several resources. The company website and Securities and Exchange Commission documents filed by the company contain this information, and any brokerage firm can also provide lists of dividend paying companies. Each year financial websites and magazines publish the top 100 or more dividend yielding stocks, typically at the end or beginning of a year.Historical information is available through the same resources. Companies that consistently pay dividends each year are sought by some investors, particularly those seeking an income stream from this source.More reference links: http://www.topyields.nl/Top_100_dividend_yields_1.php http://www.fool.com
