How to Buy Dividend Stocks

A dividend is basically a reward that companies give their shareholders. Usually, dividends are paid in cash but they can also come in the form of additional shares. Dividends are typically hallmarks of large, stable companies that may not enjoy stellar growth but are still profitable. The dividend payouts are a form of stable income for investors who may not want to risk money on a less establish "growth" company.

Decide what company you want to invest in. Presumably, you are looking for a company with a stable dividend that pays out on a regular basis. For example, lets invest in a DOW 30 company that gives a high quarterly dividend, General Electric.

Call your broker or log-in to your online brokerage account. If calling your broker, simply ask about General Electric's dividend. Your broker should be able to answer any questions.

Log into your personal online brokerage account and bring up information on General Electric on your favorite financial site. We can see from these sites that General Electric has increased its dividend overtime and now pays $0.31 quarterly per share. So if we buy 100 shares of GE, we should expect to receive $124 a year in dividends.

Click on trade and enter the ticker symbol for General Electric (GE). Enter the amount of shares you want to purchase. You can look up the share price on your brokerage page or on that same financial site used to find the dividend information.

Click trade or submit using a market order for the simplest kind of trade. Congratulations! You are now invested in a dividend-yielding stock.

Tips

  • The dividend yield is a popular measure of investors to determine how much the returns on dividends a company will pay out will be in a given year. The formula is (Annual Dividends per share) / Price per share. This helps when comparing two otherwise equal dividend paying stocks.

About the Author

Jason Gordon is a professional writer and editor. In addition to online work, he has written for "Texas Highways," "AAA Southwest," "Glimpse," the "University of Washington Daily" and the "Dallas Morning News." Gordon's passions include animals, reading and finding the perfect pairings of pastry and espresso.