Part 6/9:
Dividend Stocks
Investing in dividend stocks is another effective way to build passive income. When you hold shares of a company, you potentially earn a portion of its profits through dividend payouts, usually on a quarterly basis.
However, not all dividend stocks are reliable. Before investing, consider:
Dividend Yield: This metric shows how much return you gain relative to the stock price.
Payout Ratio: This percentage reveals how much of a company’s earnings are returned to shareholders as dividends. A balance between a good payout ratio and company reinvestment is crucial for long-term stability.