Dividend Investing Resources

Calculators

Sample Starter Portfolios

These examples show how to allocate monthly contributions across different goals. They are not recommendations — they are illustrations of the method. Always run every stock through the 4-filter checker using current data before purchasing.

All stock selections and yields are as of February 2026 and are subject to change. These are educational examples only — not investment advice or recommendations to buy or sell any security. Always verify current data before purchasing.

Key Terms

Annual Dividend

Total dividend paid per share over one year. For stocks that pay quarterly, this is typically the quarterly payment × 4.

Auto-Invest

Automatic recurring investment feature that purchases shares monthly without manual intervention. The single most important habit in the book's system.

Cost Basis

The total amount you've invested in a stock, used to calculate capital gains or losses when you sell.

Dividend

Cash payment made by a company to shareholders, typically quarterly, representing a share of company earnings.

Dividend Aristocrat

A company in the S&P 500 that has increased its dividend for 25 or more consecutive years. Aristocrat status signals exceptional business durability.

Dividend Growth

The rate at which a company increases its dividend payment year over year. A 10% annual growth rate doubles the dividend every 7 years.

Dividend King

A company that has increased its dividend for 50 or more consecutive years — the most elite dividend payers in the market.

Dividend Yield

Annual dividend per share divided by the current stock price, expressed as a percentage. Formula: (Annual Dividend ÷ Stock Price) × 100.

DRIP

Dividend Reinvestment Plan. Automatically uses dividend payments to purchase additional shares, including fractional shares, without fees or manual action.

Ex-Dividend Date

The cutoff date to qualify for the next dividend payment. You must own shares before this date to receive that quarter's dividend.

Fractional Shares

Ownership of less than one full share — for example, 0.43 shares. Enables small investors to buy any stock regardless of its price per share.

Payout Ratio

The percentage of earnings paid out as dividends. Formula: (Annual Dividend ÷ Earnings Per Share) × 100. Under 70% is safe; over 90% is a danger zone.

Qualified Dividend

A dividend eligible for preferential tax rates (0%, 15%, or 20%) rather than ordinary income rates. Most dividends from U.S. corporations held long enough are qualified.

REIT

Real Estate Investment Trust. A company that owns income-producing real estate and is required by law to distribute at least 90% of taxable income as dividends. Typically evaluated by FFO coverage, not standard payout ratio.

Roth IRA

A retirement account funded with after-tax dollars where investments grow completely tax-free. Dividends inside a Roth IRA are never taxed. Withdrawals in retirement are also tax-free.

Taxable Account

A standard brokerage account with no contribution limits and no age restrictions, but dividends are taxed every year even if reinvested.

Total Return

The combined return from price appreciation plus dividends received over a period. What actually matters — not just price movement.

Yield on Cost

Your personal dividend yield based on your original purchase price, not the current market price. Formula: (Current Annual Dividend ÷ Your Purchase Price) × 100. Grows over time as the company raises its dividend.

Yield Trap

A stock with an unsustainably high dividend yield — typically caused by a falling stock price — that signals likely dividend deterioration or a cut. High yield is a warning sign, not an opportunity.