Steady returns with dividends

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Editor’s note: This is a transcript of the audio file.

When the markets are volatile investors can still receive regular income from their stock investments via dividends. I’m Kristin Arnold with your Bankrate.com Personal Finance Minute.

So, what exactly are dividends and what are the benefits of dividend paying stocks for investors? Greg McBride, Senior Financial Analyst, with Bankrate.com explains.

Dividends are regular cash payments made to the shareholder of a company. Dividends can really add up, especially when reinvested. Companies that pay dividends also tend to produce steadier performance in volatile markets.”

Sounds like dividends are a good option for investors – what are some things investor should know before going in?

Dividends aren’t fixed; they come from profits so a company downturn could jeopardize the dividend. So you want to make sure that you’re diversifying your money among different companies that have sustainable profits.”

Investors can add dividend-payers to their portfolios by purchasing individual stocks, mutual funds, or exchange-traded funds.

For more information on dividends, just visit Bankrate.com. I’m Kristin Arnold.