By Brian M. Reiser When you invest in a stock, oftentimes you expect to earn income by receiving dividends. And knowing how much of a company’s earnings it pays out as dividends can tell you a lot about that firm. Enter: the dividend payout ratio.
After all, there are two basic ways you can earn profits from buying a stock. Those are:
Capital Appreciation
Receiving Dividends
Capital appreciation occurs when the price of the stock increased from the price you purchased it at. So, if you bought the stock at $60 and it increases to $65, you’ve earned a $5 profit (before taxes, anyway).
Dividends are the other way …read more
