What Are Dividend Stocks?

Dividend-paying companies are a wise addition to most portfolios. Here, we answer the question "what are dividend stocks," and explain how to find the best ones.

dividends written on blue Post-It next to roll of dollars and calculator
(Image credit: Getty Images)

Investors have many choices these days to create income in their portfolios. One way to do so is to buy dividend stocks, especially from companies that increase their payouts over time. But what are dividend stocks?

"Dividend income is often overlooked amid gyrations in the stock market," writes John Eade, president and director of Portfolio Strategies at Argus Research. "But dividends are an important element of return." And as such, they can help soften the blow during periods of market uncertainty like we saw in 2022, when the Federal Reserve began aggressively hiking interest rates to bring down inflation.  

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Mark R. Hake, CFA
Contributing writer, Kiplinger

Mark R. Hake, CFA, is a Chartered Financial Analyst and entrepreneur. He has been writing on stocks for over six years and has also owned his own investment management and research firms focused on U.S. and international value stocks, for over 10 years. In addition, he worked on the buy side for investment firms, hedge funds, and investment divisions of insurance companies for the past 36 years. Lately, he is also working as Chief Strategy Officer for a tech start-up company, Foldstar Inc, based in Princeton, New Jersey.