A beginner's guide to dividends

Dividends - company profits paid out to shareholders - are absolutely critical to your returns as an investor. Since 1925, nearly half of the return an investor would have made from the main US stock market came from reinvesting dividend income into shares. Here, Tim Bennett explains what dividends are, how they work, and how to find the best dividend-paying stocks.

Why do you invest in shares? To make money. And how do you make money out of shares? The most obvious way is to sell the share for more than you bought it for. That gives you what's called a 'capital gain'.

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Tim graduated with a history degree from Cambridge University in 1989 and, after a year of travelling, joined the financial services firm Ernst and Young in 1990, qualifying as a chartered accountant in 1994.

He then moved into financial markets training, designing and running a variety of courses at graduate level and beyond for a range of organisations including the Securities and Investment Institute and UBS. He joined MoneyWeek in 2007.