What is dividend investing?

Dividend investing is a strategy for generating passive income from your investments by buying stocks that pay regular dividends. A good place to begin is to compile a list of stocks with high and stable dividend payouts. An investor can then analyze each company to see whether they're a fit for their portfolio.

How to invest in dividend stocks?

Here's a closer look at how to invest in dividend stocks. Let's look at an example. Say you buy 100 shares of a company for $10 each, and each share pays a dividend of $0.50 annually. If you invested $1,000, you would receive $50 in dividend payments over the course of a year. That works out to a 5% dividend yield -- not too shabby.

What are dividend stocks?

Dividend stocks are shares of companies that regularly pay investors a portion of the company's earnings. Some pay dividends annually, semi-annually or quarterly, while others are monthly dividend stocks. The average dividend yield of some of the top dividend stocks is 12.69%.