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Dividends — getting paid to own

Quarterly checks just for owning shares.

The idea

Some companies share their profits with the people who own them — that payment is called a dividend. So just by holding the stock, you can get a little cash, often every few months. Reinvesting that cash to buy even more shares turns it into the compounding snowball working for you. 💸

Words to know

Dividend: Cash a company pays you just for owning its shares, usually every few months.
DRIP: Dividend Reinvestment Plan — automatically using your dividends to buy more shares.
Dividend yield: The yearly dividend divided by the stock price, shown as a percent.
Payout ratio: The share of a company's profit that it pays out as dividends.
Total return: Your full gain — the stock's price growth PLUS the dividends it paid.
KO: The ticker (short code) for Coca-Cola stock.
VOO: An index fund that holds about 500 of the biggest US companies in one basket.

Try it — no account needed

You own 100 shares of Coca-Cola. They just paid you $45 in dividends. You're 14 and don't need the cash. What's the smart play?

In the full lesson

1Make the call

Vine has 107 lessons like this one, each written three ways so a 7-year-old and a 17-year-old both get a version that fits.

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