Start building your financial future today! With a beginners guide to dividends, you can begin earning passive income in the stock market.

Distributing profits to investors, dividends provide a method of generating passive income when engaging in stock market investing

The list shows the 10 highest paying FT100 dividend companies end 2022.

Company	Forecast dividend yield 2023 (%)
Persimmon PSN	15.0
NatWest Group NWG	11.6
M&G Ordinary Shares MNG	10.8
Vodafone Group VOD	9.4
Taylor Wimpey TW.	9.2
Barratt Developments BDEV	8.6
Phoenix Group Holdings PHNX	8.5
Admiral Group ADM	8.4
Glencore GLEN	8.4
Legal & General Group LGEN	7.9
Source: SharePad. Data as at 19 December 2022 via ii.co.uk

What are dividends?

Shareholders receive dividends on a regular basis from a company’s earnings or funds. Dividends may be distributed as cash or as additional stock

Dividends can be paid out in cash, or in the form of additional shares of stock. Generally, dividend amounts vary from one quarter to another depending on the company’s performance.

How do you invest in companies that pay dividends?
When it comes to investing in shares for dividends, the most commonly known source is publicly traded companies. These are businesses that are listed on a stock exchange, such as the NYSE, NASDAQ, and LSE, and that offer their shares to investors.

To gain access to these stock exchanges you must use a broker. There are many different brokerages accessible to almost everyone. For example IG, Trading 212, Etoro – but there are many many more.

When are dividends paid?
Dividends are typically paid out on a quarterly basis, though they can also be paid out annually, semi-annually, or even monthly.

Although be aware that occasionally companies that normally pay dividends may choose not to do so, due to other commitments. This is not necessary a bad thing depending on the economic climate.

Further reading

Research companies that pay dividends, and the earnings per share. This is how much you will receive for every share that you own. The share price i.e. the cost to buy one share fluctuates throughout the day. The dividend end payment is a percentage of the share price and is called the dividend yield %. When comparing different companies and their dividend payment – consider industries – such as medical, real estate, technology, manufacturing and food industries.

Let us know any industries you’ve been researching in the comments!