Big dividend payouts in small caps

High yield dividend stock investing seems to be all the rage right now, as investors look to insulate themselves from share price depreciation via a guaranteed quarterly payday. But the result has been a lot of misinformation about dividends, yield and income investing – and that has confused and frustrated many long term investors.

For instance, if a stock paid a $1 dividend for three straight quarters but cut it to a penny last week, does it really have an annual payout of $3.01? Or if a company pays a massive special dividend, can you really use those numbers to inflate the stock’s yield? If your stocks are only paying back pennies a share despite claims of being a “high yield dividend stock,” are you really playing it safe?

Source: InvestorPlace

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