Dividend investing

Dividend investing is an investment style that prefers stocks which pay a dividend.

Dividend-paying stocks may be preferred because of a desire by investors for cashflow, or because companies which pay dividends may tend to be large and relatively stable.

Dividend investment as a style has been criticised as irrational, because when a company pays a dividend its stock price should fall by an equivalent amount. Companies can also return cash to shareholders through stock buybacks, or retain or reinvest it. Investors should instead look at the total return of a stock.