"Dividends" The secret to long term financial security.

The internet is full of get rich schemes that are usually designed to take your hard earned money. The story of the turtle and the rabbit rings true in this regard. Sometimes in life the best thing take both time and patience to achieve perfection and this includes financial security.

Dividends are a great way to achieve steady streams of passive income; income that does not require effort in order to be obtained. When you are asleep at night companies are busy producing goods and services that end up paying you. You can rest assured at night knowing that pennies, nickles, and dimes of wealth accumulating for payout in the form of a dividend.

When you own a portion of a company known as a share you are entitled to a portion of that companies earnings. Company XYZ pays out $.15 cents a share every quarter, then you would be entitled to that money four times a year for a total payout of $.60 cents annually. This money can be used to pay bills, go out for a fun date night, or can be reinvested for compounded dividend growth.

There are a few terms when investing in dividend stocks that every investor should know.-

"Declare date"- This is when a company declares that it will pay out a dividend.

"Ex dividend date"- In order to get the dividend you must own the stock before the ex-dividend date.

"Pay Date"- The day that the dividend is paid out to shareholders.

Companies can pay out there dividends at different intervals, Some pay yearly, semi annually, quarterly, and some pay out monthly.

Dividends are great way to get long term wealth; companies that pay out dependable dividends for many years are known as dividend aristocrats. When choosing a company to invest in try to make sure that the company has an economic moat that helps keep it economically sound. For example railroads have an economic moat in that they are extremely expensive to start. Purchasing land to lay new tracks is nearly impossible in modern day america.

The last piece of advice that I can offer is that it is very important to diversify. Don't put all of your money in one basket. This will help preserve your hard earned capital and will help spread out the risk and reward.

Disclaimer: I am not a financial adviser and these are my personal opinions.