A dividend payment is the distribution of a company's profits to its shareholders. Dividends are usually paid in cash but sometimes in company stock, and companies often use them to return excess profits to investors.
Beyond that basic definition, there are a number of important things about dividend payments that investors should know:
- How do companies decide on dividend payments?
- How do stocks pay dividends?
- When do stocks pay dividends?
- How do you get dividend payments?
- What is the average dividend payment?


But those special dividends are less secure than the regular dividend, even from companies with a history of paying them. Investors looking for dependable income should exclude them from dividends per share when calculating the dividend yield.
Determining when each stock you own will pay dividends is relatively easy. When a company's board of directors determines the next dividend, it will declare the dividend, typically in a press release or in a filing with the Securities and Exchange Commission (SEC). This release will disclose the amount of the dividend, the dividend payment date, and the date you must own shares to receive the dividend payment.
How do you get dividend payments?
Although some investors own stocks in company-sponsored direct stock purchase plans and receive the dividend directly from the company, the vast majority own stocks through a broker. In this case, the dividend payments come to your brokerage and are deposited in your brokerage account.

For this reason, your dividend payment may not appear in your account on the payment date in the company's release declaring it. It could be a day or two before the money shows up. This is particularly important if you are counting on those dividend payments for income since you may need to allow for a few more days to transfer the cash from your brokerage account into your checking or savings account.
In those rare instances when a company makes a dividend payment in company stock, it will take even longer to get cash if you own the dividend as a source of income today. You'll need to sell the shares and then wait a couple of business days for the trade to settle before you can initiate the cash transfer. Make sure to plan accordingly.
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As you can see, it can fluctuate significantly from one period to the next, with the dividend yield falling sharply because of the rebound in stock prices from the lows of 2020.
Individual industries, such as utilities and real estate, often pay higher dividends due to the stability of their revenues and their slower rate of growth. More volatile industries, such as consumer discretionary goods and technology companies, generally pay much smaller dividend payments, as seen below.
