Login | August 18, 2026
What's a Dividend?
Motley Fool
Published: August 18, 2026
Q. What's a dividend? -- D.S., Rochester, Minnesota
A. It's a portion of a company's earnings that's paid to shareholders. Imagine that each year Scruffy's Chicken Shack (ticker: BUKBUK) earns $6 per share and pays out $2 per share -- or $0.50 per quarter. So someone owning, say, 100 shares will receive $50 each quarter, totaling $200 over the year.
It gets better, because healthy and growing dividend-paying companies tend to increase their dividends over time. So in future years, that shareholder might be collecting $300 and then $400 annually. And the stock's share price is likely to increase over time, too.
Dividend investors often look at a company's "dividend yield." That's its annual dividend amount divided by its current share price. So if Scruffy's was priced at $50 per share, divide $2 by $50 to get 0.04, or a 4% dividend yield.
Not all companies pay dividends. Some use their excess cash to further their growth, pay down debts or buy back some shares, among other possibilities. Many companies do a combination of those things with their funds. Generally, it's well-established companies with relatively reliable earnings that commit to a regular dividend payment.
Q. I know that public companies have to file reports with the Securities and Exchange Commission (SEC). How do investors access them? -- V.E., Bend, Oregon
A. Many companies share their quarterly 10-Q and annual 10-K reports right on their own websites, often in an "Investors" section. You can also look them up at SEC.gov/search-filings. If you're old-school, try calling the company's Investor Relations department and ask if they can mail you the latest annual report and quarterly filings.
Fool's School
Warren Buffett's Teacher
Many investors credit Warren Buffett for teaching them valuable investing lessons. But who did Warren Buffett learn from? He has most often credited his longtime business partner, Charlie Munger, and his mentor, Benjamin Graham. Here are some instructive quotations from Graham's classic book, "The Intelligent Investor."
-- "There are no sure and easy paths to riches on Wall Street or anywhere else." This is a good reminder that hot stock tips and "investments" that seem too good to be true will often disappoint.
-- "Obvious prospects for physical growth in a business do not translate into obvious profits for investors." In other words, some companies may seem to have a golden future, but they may not turn out to be great investments if they're poorly managed, face tough competition or are grossly overvalued.
-- "The investor's chief problem -- and even his worst enemy -- is likely to be himself." We need to keep our emotions in check when investing, not selling in a panic when others do or buying overpriced stocks when others do. We need to understand our investments and have reasonable expectations, too, and not just follow the crowd.
-- "The margin of safety is always dependent on the price paid. It will be large at one price, small at some higher price, nonexistent at some still higher price." While those chasing growth stocks will often buy into them no matter how expensive they get, Graham (and Buffett) favor "value" stocks -- those trading for less than they seem to be worth. Such investments have a built-in margin of safety that can reduce investors' possible losses.
-- "Invest only if you would be comfortable owning a stock even if you had no way of knowing its daily share price." If you're a long-term investor, day-to-day or month-to-month stock-price movements shouldn't concern you.
Buffett has said that "The Intelligent Investor" is "by far the best book on investing ever written." If you're serious about stocks and want to learn more, check it out.
My Dumbest Investment
Peloton Pain
My most regrettable investment move occurred on my first day of investing a few years ago, a couple of years after the COVID-19 pandemic began. At age 55, wanting to learn more about investing in stocks, I had opened a brokerage account and set aside $20,000 to invest. My first purchase was shares of the fitness equipment company Peloton Interactive. We had just bought one of their bikes and loved it, and they were selling like hotcakes, as many people were exercising at home instead of at gyms and subscribing to Peloton's features.
As the world came back to life, though, the stock started dropping like a lead balloon. I learned a good lesson: Invest with my head and not my heart, and look at the bigger picture. -- Douglas, online
The Fool responds: You're right that the big picture is important -- including whether a stock is attractively valued or overvalued. Investors were smart to identify Peloton as a company that could benefit from more people staying and working at home. So the share price soared by around 700% between mid-March 2020 and mid-January 2021 -- but then it retreated sharply, in part due to overvaluation. The stock has struggled in recent years, with declining revenue and subscribers and multiple CEOs. It may yet recover, but it's only for risk-tolerant long-term investors. (The Motley Fool owns shares of and has recommended Peloton Interactive.)
Foolish Trivia
Name That Company
I trace my roots back to 1837, when I opened my first store in New York City, selling almost $5 worth of goods that day. My "Blue Book" direct-mail catalog debuted in 1845. I've sold jewelry to Abraham Lincoln and John F. Kennedy. In 1885, I redesigned the Great Seal of the United States, which is featured on dollar bills. My flagship location opened in 1940 on Fifth Avenue. I've created NFL and NBA trophies. In 2001, Pantone named a color for me. I was bought by the French luxury conglomerate LVMH Moet Hennessy Louis Vuitton in 2021. Who am I?
Last Week's Trivia Answer
I trace my roots back to 1919, when two people combined four grain milling companies, forming Nebraska Consolidated Mills. Today, I'm based in Chicago and have a recent market value of $6.6 billion. In the consumer packaged goods industry, I'm a pure-play food company, with brands such as Birds Eye, Duncan Hines, Healthy Choice, Hebrew National, Marie Callender's, Orville Redenbacher's, Reddi-wip, Slim Jim and Wish-Bone. Several of my brands originated more than 125 years ago. I recently raked in more than $11 billion annually, boasted 42 U.S. manufacturing plants and employed 18,600 people worldwide. Who am I? (Answer: Conagra Brands)
The Motley Fool Take
Drugs and Dividends
Pharmaceutical giant Pfizer (NYSE: PFE) offers one of the most attractive dividends in the healthcare sector, recently yielding around 6.8%. It has paid a dividend for 350 consecutive quarters, with the 351st due in September.
Few companies have a broader lineup than Pfizer. It markets over a dozen blockbuster products, including vaccines and primary-care drugs, specialty drugs and cancer therapies. Pfizer's pipeline features 96 programs, 36 of which are either awaiting regulatory approval or in late-stage testing.
It's not all roses and rainbows, though. Pfizer faces daunting patent cliffs over the next couple of years. Xeljanz loses U.S. patent exclusivity this year; Ibrance, Xtandi and Eliquis follow suit in 2027. The drugmaker also experienced a recent setback, when its lung cancer drug candidate sigvotatug vedotin failed to meet its initial goal in a phase 3 study.
Meanwhile, Pfizer has an experimental anti-obesity drug called berobenatide, which it hopes to launch in 2028, believing it will compete well against Eli Lilly's Zepbound.
Long-term income-seeking investors might want to take a closer look at Pfizer. (The Motley Fool owns shares of and recommends Pfizer and Eli Lilly.)
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