Dividend investing
Training 685 minutesdividend investing
You are 45 and work as an electrician. The dream: companies paying you every quarter. You have a $20,000 portfolio and want to grow cash flow.
Training goal: Build a reliable dividend stream
▶ Play this trainingSituation
1. A share costs $50 and pays $2 a year in dividends. What is the dividend yield?
- 25%, since $50 divided by $2
- 4% a year
- $2 a month per share
2. A screener shows a stock yielding 14%. Its price halved this year and profits are shrinking.
- Buy it: 14% beats 4%
- Buy a little, maybe I get lucky
- Pass: looks like a yield trap
3. Your first dividends arrive: $200. Spend them or reinvest?
- Reinvest into the same fund
- Celebrate with dinner
- Let it sit in the account
4. A friend says dividends are "extra money on top". Is that true?
- Yes, the share price stays the same
- Total return matters, not just payouts
- Buy right before payouts only
What you will learn
- Dividend yield = yearly dividend / price.
- A very high yield often signals trouble.
- Look at total return and reinvest while building.
Your real-life step
Work out the portfolio size that would cover your monthly utility bill with a 3% dividend yield.
Questions and answers
What are dividends?
A share of profit a company pays to shareholders, usually quarterly or twice a year. The company can cut or cancel them.
What is a good dividend yield?
For stable companies, usually 2-5%. A yield far above the market often means investors expect a cut.
Are dividends taxed?
In most places, yes. The rate depends on your country and account type, and some retirement accounts defer or reduce it.
More trainings in this module
- How to start investing
- Risk vs return
- What are stocks
- What are bonds
- Index funds and ETFs
- Diversification
Numbers are illustrative. A game, not financial advice.