Dividends

A dividend is moving money from your left pocket to your right pocket and getting taxed in the process. When you own the stock, you own a part of the company. Since it's your company, it’s already your cash whether it gets paid out as a dividend or not. This is why stock prices drop by the amount of the dividend on the day labelled “ex-div”.

Dividend-paying stocks and dividend ETFs can be a great edition to a diversified portfolio. But beware that high dividends, while psychologically comforting, can sometimes bait you into weak companies with shaky finances - and therefore an unsustainable dividend.