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Investing in the stock market involves more than just picking a fast-growing company and hoping the stock price takes off. Many wise investors also seek companies that pay a dividend. Dividends are different than the ticker price you might see for a company. A dividend is a payout, usually in cash, that a company apportions from its profits to its shareholders. Dividends are paid at varying times, depending on the company. Some companies pay an annual dividend, while others pay quarterly; and a few pay monthly dividends.
However, not all companies pay a dividend to their shareholders. Most newer, fast-growing companies choose instead to reinvest profits, hoping to grow the business even more and obtain a larger market share. However, older, well-established businesses that don't see a large potential for growth often pay dividends. Johnson and Johnson is one example of a US company that pays a dividend.
Investors should learn whether a company pays a dividend before investing; furthermore, knowing the amount of a typical dividend as a percentage of the stock price can aid investors in making wise decisions. The advantage of investing in companies that pay a dividend is a steady cash flow, even when the market does not perform well. You can find more information about dividends at Business.com.