This usually occurs during a recession when sales drop and firms are not able to pass on higher prices to consumers. Dividend A dividend is a distribution of a company's earnings to shareholders. The company's board of directors determines the distribution amount and it is normally paid on a quarterly basis by check. Shareholders must declare dividends as income in the year that they are received. The shareholder tax on mutual fund dividends is dependent on whether the distributions resulted from capital gains or interest income.
Some plans allow shareholders to purchase additional shares at a discount to the market price.
The dividend yield is the annual percentage of return earned by an investor on a common or preferred stock. The yield is calculated by dividing the amount of the dividends per share by the current market price per share of the stock. Dollar Cost Averaging Dollar cost averaging is an investment method that enables an investor to accumulate assets by investing a fixed amount of dollars in securities at regular intervals. Because the investor buys more shares when the price is low and fewer shares when the price is high, the overall cost is lower than it would be if a constant number of shares were bought at specific periods of time. The DJIA is a price-weighted average of 30 actively traded blue chip stocks.