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Originally Posted by oilers_fan
So what do you mean by dividend in this case? I am a true novice when it comes to stocks. With a government bailout, the stock isn't necessarily going to climb?
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A dividend is the money that a company pays you for owning a stock...just like the bank pays you interest in a savings account. Some companies have high dividends, some have low, some don't even have any! In essence the stock could remain level for years, but you would still be making some money because of the dividend.
Although you need to be careful with dividends. If they are too high, it's usually because the stock is doing poorly, and often means the company can't afford to pay out the dividend (and therefore will most likely slash it eventually).
If you listen to guys like Jim Cramer, a company like Linn Energy (LINE) is a great dividend play, because right now it pays you about 16%/year (which is known as the yield) just for owning stock. It's supposedly a pretty safe bet that they won't cut it either.