Dividend investing, explained plainly
Twenty-two guides on how dividends work, how to judge whether one is sustainable, and how compounding and concentration really behave. Hypothetical examples only: no picks, no market data.
Read in any order. If you're new, start with what a dividend is and how yield moves.
Twenty-two guides explain dividends from the ground up: what a dividend is, how yield and payout ratios work, why cuts happen, how dates and reinvestment work, and how to build income. Each guide answers first, works one example with real numbers, and links to the calculator that does the same sum with yours.
Start here
What a dividend is, how yield works and when you get paid.
What is a dividend?
A dividend is a cash payment a company’s board chooses to send shareholders. Learn how dividends work, how they’re declared, and why they’re never guaranteed.
Dividend basicsDividend yield explained
Dividend yield is the annual dividend divided by the share price. See the formula, trailing vs forward yield, and why yield rises when a share price falls.
Dividend datesEx-dividend, record and payment dates
Declaration, ex-dividend, record and payment dates explained for Canada and the US under T+1 settlement, with a worked calendar showing when to own shares.
Practical skillsReading a dividend announcement
How to read a dividend announcement: amount, frequency, record, ex and payment dates, currency, eligible-dividend designation and per share vs per unit.
Cash flowMonthly vs quarterly dividends
Monthly vs quarterly dividends: frequency doesn’t change annual yield, it changes cash-flow timing. See the small compounding difference worked out in dollars.
Dividend typesSpecial dividends explained
Special dividends are one-time payouts. Learn why they shouldn’t be annualized in yield, how ex-dates can differ for large payouts and what to check in each.
Is the dividend safe?
Payout ratios, cash flow, yield traps and what happens in a cut.
Yield vs yield traps: why a high yield can signal risk
A yield trap is a high dividend yield caused by a falling share price, often before a cut. Learn how price drops inflate yields and use our checklist.
Dividend safetyPayout ratio explained
The payout ratio shows how much of a company’s earnings or cash goes to dividends. Learn both formulas, why they differ by industry, and how to read them.
Dividend safetyFree cash flow and dividends
Dividends are paid in cash, so free cash flow is a key test of whether a payout is covered. Learn the formula, coverage ratios and multi-year checks.
Dividend riskDividend cuts: causes, warning signs and what happens next
Why companies cut dividends, the warning signs to watch, what usually happens to price and yield, and how a cut affects DRIPs and income plans.
Income structuresREIT and income trust distributions
How REIT and income trust distributions differ from dividends, why return of capital affects your cost base, and why AFFO is the usual payout yardstick.
Income securitiesPreferred shares basics: fixed, rate-reset and perpetual
How preferred shares work: fixed vs rate-reset vs perpetual, cumulative vs non-cumulative dividends, call risk and why prices move with interest rates.
Growth and compounding
Dividend growth, yield on cost, DRIPs and total return.
Dividend growth investing
How dividend growth rates and CAGR work, with worked examples, and when a lower-yield, faster-growing dividend can out-earn a higher starting yield.
Measuring incomeYield on cost explained
Yield on cost divides today’s dividend by what you originally paid. See what it measures, what it hides and why opportunity cost matters, with worked examples.
Reinvesting incomeDRIPs: dividend reinvestment plans explained
How DRIPs work: company plans vs broker DRIPs, fractional vs whole shares, synthetic DRIPs, plan discounts, and why reinvested dividends are still taxable.
Core conceptsTotal return vs dividend yield
Total return adds dividends to price change. Learn why a dividend isn’t free money, how share prices adjust on the ex-date and how homemade dividends compare.
Capital allocationShare buybacks vs dividends
Buybacks vs dividends: both return cash to shareholders. See the share-count arithmetic, the flexibility and tax trade-offs, and what to check for each.
Building and managing income
Concentration, funds vs stocks, income plans, retirement and common mistakes.
Sector concentration risk in dividend portfolios
Why dividend portfolios drift into a few sectors, how holding, sector and income weights differ, and how to read the effective number of holdings (1/HHI).
Portfolio buildingDividend ETFs vs individual dividend stocks
Dividend ETFs vs individual stocks compared: diversification, fees (MER and expense ratio), index rules, concentration and control, with worked fee examples.
PlanningBuilding a dividend income plan
How much capital does a dividend income goal need? Divide target income by yield, then stress-test for cuts, inflation and taxes. Hypothetical tables inside.
Retirement incomeDividend investing in retirement
Dividend investing in retirement: income vs total-return withdrawals, cash buffers, sequence risk, account location and how dividends affect the OAS clawback.
Avoiding errorsCommon dividend investing mistakes
Seven common dividend investing mistakes, from chasing yield and ignoring debt to losing US withholding in the wrong account and forgetting ACB on DRIP shares.
22 guides. Tax details live in the dividend tax hub.
| Dividends per share, FY2016 | C$1.550 |
|---|---|
| Dividends per share, FY2025 | C$2.510 |
| Starting yield, if bought in FY2016 | 4.0%An illustration, not Fortis's actual yield then |
| Yield on the original cost today | 6.5%4% × (latest dividend ÷ FY2016 dividend) |
Read the yield-on-cost guide →Computed 2026-11-10.
