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Dividend Stock

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Definition of 'Dividend Stock'

A Dividend Stock is a Dividend-Paying Stock. Most investors and market traders drop the word "paying" and just refer to these stocks as Dividend Stocks.

Some companies don't pay dividends and therefore their stock is non-dividend-paying. A company might not pay dividends if it's making a loss or needs the capital for research and development spending, acquisitions or other growth.

Studies have shown that stocks that pay dividends and that manage to increase their dividends every year command a higher price (ceteris paribus) than stocks which don't pay dividends.

Every year, Standards and Poors comes out with its S&P 500 Dividend Aristocrats. The S&P 500 Dividend Aristocrats index measures the performance of large cap, blue chip companies within the S&P 500 that have followed a policy of increasing dividends every year for at least 25 consecutive years.

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