What does high dividend stock mean?

In finance, a high dividend stock refers to a stock of a company that pays out a relatively high dividend yield compared to other stocks in the market. A dividend yield is a financial ratio that represents the annual dividend payment as a percentage of the stock's current market price. High dividend stocks are often sought after by investors who are looking for regular income from their investments, as the high dividend yield can provide a steady stream of cash flow. These stocks are typically issued by established and financially stable companies that have a history of consistently paying dividends to their shareholders. Investing in high dividend stocks can be attractive for income-oriented investors, especially in a low interest rate environment, as they provide a potential source of passive income. However, it is important to note that high dividend yields can also be a sign of financial distress or poor growth prospects for the company, so investors should conduct thorough research and analysis before investing in these stocks. Overall, high dividend stocks can be a valuable addition to an investment portfolio, but it is important for investors to assess the company's financial health and growth prospects before making an investment decision.