High dividend stocks seem to be the flavor of the month with Wall Street taking a nose dive the past few months. So why have stocks with high dividend yields become so popular? Are you aware that the New York Stock Exchange has over 2764 stocks listed and if you consider the dollar amount traded daily is the largest exchange in the world.

Over the past few years people have been tripling their money, it seemed everyone was an expert and as we know, Wall Street was the place for investors. Because of the high appreciation of stock shares many high dividend paying stocks were overlooked. Why take a $1 dividend when you can watch your share price double in a few short months.

As I’m sure you’re painfully aware thats not the case today. Conservative investors have been investing in high dividend stocks for years. Now it seems many more are starting to look for the safety and cash flow of high yield dividend stocks.

This is because stocks with high dividend yields are called income stocks. Simply put, if you are the shareholder of a stock that pays a dividend, usually quarterly, you will receive a payment from the company of the stock you own. This is your part of the profit that the company has earned. So if you owned 500 shares of a company that paid a quarterly dividend of fifty cents you would get $2 for every share you owned, in this case 500 shares, per year.

High paying dividend stocks allow you to make money 2 different ways. The first is from the dividend as I explained a minute ago. The second way is for the share price to go up. So its possible for the sharre price to double plus you can receive an additional dividend increasing your profit.

Even better, current tax rates provide for a very low 15% federal tax on dividends versus the 20% or higher paid by most of us on earned income. This higher rate is also paid on stocks bought and sold within the course of one year. Day traders and others who buy and sell stocks on the short term can end up making the government more money than themselves.

Dividends are measured as a percent of a stock. For example, if a stock is at $100 and it pays a $5 dividend that stock is said to have a 5% dividend. This is also referred to as a dividend yield. High dividend stocks as a general rule are stocks with a yield over three and a half percent. Some very high yields can exceed 10% or 15% however, be careful. Very high yields can be deceptive and signal and impending dividend cut. But with the sudden decrease in stock values you’ll see more and more stocks with high dividend yields.

There literally 1000s of stocks you can buy, if you are looking to make huge gains look a buying small company or growth stocks. But if you are looking for a little stability in this crazy market and would like a nice steady stream of income then you should take a look at high dividend stocks. As always, do your homework, you are responsible for the choices you make

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