Investing in stocks that pay dividends can provide you with a steady stream of current cash flow, as well as the potential for appreciation you can get from all stocks. How and when those dividends are paid depends on a number of factors, including the dividend payment schedule of the company and whether you hold individual stocks or mutual funds.
Some companies pay their dividends on a quarterly basis, with the exact dividend schedule depending on the company itself. When you look at the stock tables, you should see a "Q" listed next to the dividend amount if the company pays its dividends on a quarterly instead of an annual basis. You can find out exactly when the company pays those dividends by contacting the investor relations department.
Some companies pay their dividends only once a year, on an annual basis. You can find information about the dividend, dividend yield and payment schedule for a particular company by calling the investor relations department, or by reviewing the most recent copy of the firm's annual report. The dividend amount should also be listed in the stock table of your favorite financial publication.
You do not have to own individual stocks to receive dividend payments. Mutual funds provide an interesting alternative for those who want to receive dividend payments from their investments and generate current cash flow. If you want to use mutual funds to generate dividends, you can look for funds labeled "income," "growth and income" and "dividend income." These funds typically pay dividends to their shareholders on a monthly basis, and your monthly statement should indicate how much dividend income was generated for the past month.
If you hold your dividend paying stocks through a mutual fund, you can ask that the dividends generated by the fund be used to purchase additional shares. If you do not need the dividend money to meet current cash flow needs, selecting the reinvestment option is a good way to build up a higher number of shares over time. The reinvestment option is typically the default one, so if you do want your dividends paid out, you will need to indicate that when you open the account, or change that option later on.