If you want to extract some cash from your stocks without having to sell them, look for dividends. But it's not enough to know how much, in dollars, a company will regularly spit out. You need to relate that to the stock's price. There's a handy number that does that for you: the "dividend yield."

The dividend yield simply expresses the relationship of two numbers: a company's stock price and the amount of its annual dividend.

As an example, look at ChevronTexaco Corp. (NYSE:CVX). At the time of this writing, it was trading around $72.50 per share, and paying out $2.80 per year (in quarterly installments of $0.70) as a dividend. Take $2.80 and divide it by $72.50 and you'll get 0.039. Multiply that by 100 and you've got a dividend yield of 3.9%. This means that if you pay $72.50 for a share of ChevronTexaco, you'll earn 3.9% per year on your investment, just from dividends alone.

Companies rarely decrease or eliminate their dividends, since that would make investors unhappy. In fact, dividends tend to rise over time, delivering more value to shareholders. Every now and then, a company will announce an increase. If, in 20 years, ChevronTexaco's dividend is $10, that would represent a 13.8% dividend yield on those shares you bought for $72.50. You'd be earning a 13.8% return each year, just from dividends. There would probably be some stock price appreciation on top of that, as well.

Note that, for months or years at a time, a dividend will hold steady. But the yield can fluctuate daily. That's because a stock's price fluctuates. As a stock price rises, the dividend yield falls, and vice versa. If ChevronTexaco shares suddenly doubled in price to $145, the yield would be halved to 2% ($2.80 divided by $145 is 0.02). If ChevronTexaco stock fell to $30 per share, its current yield for those buying it at $30 would be 9.3%.

You can find some hefty dividend yields among companies whose stock prices have tumbled. At the time of this writing, for example, R. J. Reynolds Tobacco Holdings (NYSE:RJR) pays about $3.80 per share in annual dividends. With its stock trading around $36 per share, that's a whopping 10.6% dividend yield!

Be careful, though. If you're attracted to an unusually high dividend yield, you should probably study the company carefully to make sure it's not in so much trouble that a dividend cut is around the corner. Dividends do get reduced or eliminated. Delta Airlines (NYSE:DAL), for example, recently announced the curtailment of its dividend.

Lastly, know that not all companies pay dividends. Younger or quickly growing companies in particular, such as Microsoft (NASDAQ:MSFT) or Amgen (NASDAQ:AMGN), prefer to plow all or just about all their extra cash back into operations. (Though Microsoft did recently announce a very modest new dividend, yielding around 0.2%.)

Added to all this is the new, lower tax on dividends. So now is a good time to consider investing in some cash-generating companies. If you're looking for some dividend-paying ideas, check out our most recent newsletter, The Motley Fool Income Investor.