A:

First things first: a company with common stock that pays a dividend will typically distribute the dividend every quarter. However, the amount the company quotes is normally an annual figure. So, to calculate the amount you will receive each quarter, you will have to take the quoted dividend amount and divide by four. For example, if you own Cory's Tequila Corporation (CTC), which pays a $1 yearly dividend on a quarterly basis, you would receive $0.25 every three months.

That said, there are some things all investors should be aware of:

First, a stock's dividend yield will fluctuate with the market price. If CTC is trading at $10 and it pays the $1 dividend, its dividend yield is 10% ($1/$10). Now, if the price of CTC rises to $20 and it still pays the same dividend, the yield is only 5% ($1/$20). A change occurs in the yield any time the stock price changes, so don't mistakenly equate a change in dividend yield with a change in the payout you receive.

Second, companies are not required to pay dividends: this is a completely arbitrary action that the company decides itself. Granted, most companies will try to maintain a certain level of consistency with their dividend payout history to attract investors, but the payout can be changed at any time. Companies under financial stress might need to re-allocate money to different projects, or management may just change its mind and no longer want to pay a dividend. So, while a company's long-standing record of increased dividends is a good indication of payments in the future, the dividends aren't guaranteed.

If you are interested in learning more about dividends, check out these introductory articles: How and Why Do Companies Pay Dividends?, The Importance of Dividends and How Dividends Work for Investors.

RELATED FAQS
  1. What is the difference between yield and dividend?

    Learn how to differentiate between dividend yield and dividend return, and see why dividend yield is the more popular rate ... Read Answer >>
  2. What can cause the marginal propensity to consume to change over time?

    Learn about the dividend payout ratio and dividend yield, what the ratios measure and the difference between the dividend ... Read Answer >>
  3. What is the difference between the dividend yield and the dividend payout ratio?

    Learn the differences between a stock's dividend yield and its dividend payout ratio, and learn why the latter might be a ... Read Answer >>
  4. Can dividends be paid out monthly?

    Find out if stocks can pay dividends monthly, and learn about the types of companies most likely to do so and how monthly ... Read Answer >>
  5. Which companies in the chemicals sector pay the highest dividends?

    Learn what the average annual dividend yield of insurance companies is and which factors should be considered when choosing ... Read Answer >>
Related Articles
  1. Investing

    The 3 Biggest Misconceptions of Dividend Stocks

    To find the best dividend stocks, focus on total return, not yield.
  2. Investing

    Due Diligence On Dividends

    Understanding dividends and how they work will help you become a more informed and successful investor.
  3. Investing

    AAPL: Apple Dividend Analysis

    Apple's dividend has had healthy growth ever since its 2012 reinstatement, thanks to Apple's continuously rising revenue, earnings and operating cash flow.
  4. Investing

    The Top 5 Dividend Paying Oil Stocks for 2016

    Discover the top five dividend-paying oil companies for 2016 and what factors contribute to their ability to continue dividend payments.
  5. Investing

    How Dividends Affect Stock Prices

    Find out how dividends affect the price of the underlying stock, the role of market psychology and how to predict price changes after dividend declaration.
  6. Investing

    Put Dividends to Work in Your Portfolio

    Find out how a company can put its profits directly into your hands.
  7. Investing

    WMT: Wal-Mart Dividend Analysis

    Wal-Mart raised its dividend for the 43rd consecutive year, despite losing over 25% of its market value in 2015, and its dividend remains healthy in 2016.
RELATED TERMS
  1. Dividend

    A distribution of a portion of a company's earnings, decided ...
  2. Indicated Yield

    The dividend yield that a share of stock would return based on ...
  3. Dividend Yield

    A financial ratio that shows how much a company pays out in dividends ...
  4. Indicated Dividend

    The total dividends that would be paid on a share of stock throughout ...
  5. Cash Dividend

    Money paid to stockholders, normally out of the corporation's ...
  6. Stock Dividend

    A dividend payment made in the form of additional shares, rather ...
Hot Definitions
  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares ...
  2. Net Profit Margin

    Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage ...
  3. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  4. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  5. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  6. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
Trading Center