Overview:

Dividends are generally the portion of profits a company returns to its shareholders. The dividend amount you receive is based upon the number of shares that you own and the amount of the dividend declared by the company. While dividends don't generally get the same press as stock price increases, a little known fact is that dividends have represented 28% of the total return for stocks included in the Standard & Poor's 500 Index from 1989 to 2009. Given the historical importance of dividends and the growing demand for income by an aging population, it's important to understand a few basic principles of investing for dividend income.

An excellent resource on how valuable dividends can be to investors is Josh Peters' book "The Ultimate Dividend Playbook". He comments, "The goal of saving and investing then, is to replace the paychecks earned by the sweat of your brow with the paychecks from your investment portfolio."

This content has been gathered from a variety of internet resources. It is not intended as a substitute for professional financial advice. Please consult your financial advisor prior to making any investment decisions.