DividendAddiction.com - Definitions
Investing:
Investing refers to the act of allocating money, resources, or time with the expectation of generating profitable returns or achieving long-term financial goals. It involves purchasing assets, such as stocks, bonds, real estate, or mutual funds, with the aim of generating income, capital appreciation, or both over time.
Dividends:
Dividends are cash payments that a company distributes to its shareholders as a share of its profits. These payments are typically made regularly, often quarterly, and are based on the number of shares owned by each shareholder. Dividends are a way for companies to share their profits with shareholders and provide them with a return on their investment.
Dividend Reinvestment
Dividend reinvestment is a process where shareholders choose to reinvest their received dividends back into the same company's stock instead of taking them as cash. By opting for dividend reinvestment, shareholders purchase additional shares of the company with the dividend amount they would have received. This allows for compounding returns and an increase in the overall investment value over time.
Dividend Yield
Dividend yield is a financial ratio that indicates the annual dividend income earned per share relative to the price of the stock. It is calculated by dividing the annual dividend per share by the stock's current market price and expressing it as a percentage. Dividend yield provides investors with a measure of the income-generating potential of an investment.
Forward Yield
Forward yield is an estimate or projection of the dividend yield for a future period. It takes into account the expected dividends that will be paid in the future based on the current stock price. Investors and analysts use forward yield as a tool to assess the potential income return on an investment, considering anticipated changes in dividend payments.