First and foremost what is a dividend?  Simply put it is a portion of profit that a company pays out to its stock holders.  An obvious point here is that a dividend is only paid when a company is making a profit.  That said not all publicly traded corporations that are making money pay out a dividend.  Any profit not paid out to shareholders is called retained earnings.  Additionally the frequency that a company may pay out a dividend can vary from monthly to yearly.  For that reason dividends are generally looked at on an annualized basis. 

Since dividends are a portion of profit the amount paid out varies from year to year and in many cases from quarter to quarter.  Dividends are usually paid in cash to the shareholder miraculously appearing in your online brokerage account.  Some companies who regularly pay dividends will offer what is called a Dividend Reinvestment Plan (DRIP for short).  Many investors believe that a DRIP is a key to a successful portfolio, particularly for the Buy and Hold Investor. 

A Dividend Reinvestment Plan is one where a company allows the stock holder to use the dividend to automatically buy small amounts of their stock.  Usually this is done without having to pay a commission.  As stated this is a great plan for the Long Term Investor.  Using a DRIP allows the investor to accumulate stock without additional expense to the investor thus over time averaging down their overall investment.

For the investor nearing retirement or already retired dividend paying stocks can be an excellent way to generate regular income.  By doing nothing more than taking the dividend as income one can offset a pension or other retirement draws.  A word of caution is to remember what has already been stated, this is profit dependent and can vary greatly from year to year.  The best paying dividend stocks are those of companies that are large, the blue chip type companies.

When considering buying stocks in companies that do not pay dividends take a good look at the financial statements.  Make sure that the company is using their retained earnings to reinvest in the company through new projects or other forms of expansion.  If not you will need to consider whether the company is worth the investment of your hard earned money.

Day Traders are investors who generally buy and sell the same stock in the same day.  This type of trading is not limited to just buying stocks, they may also buy and sell stock options, currencies, or a whole range of futures.  None of the later three are recommended for the novice trader as they can be extremely volatile, in some cases the investor can lose far more than their initial investment.  Typically day traders may hold a stock for a matter of seconds or minutes, additionally they may buy and sell the same stock several times during the course of a day.  They tend to be out of the market (sell all of their stocks) before the trading day ends to avoid any possible after market gap downs (a situation where a stock may open the next day at a lower point than it closed the previous day).  Day trading requires a significant amount of time on a daily basis.  Generally people who day trade are doing this for a living, spending their entire day at the computer buying and selling stocks.

Swing Traders try to follow the momentum of the stock market when buying stocks.  When markets are in general moving to the upside swing traders will buy stocks that fit whatever criterion they are using to select stocks, selling when this swing in the market has topped or nearing what they have calculated to be the top.  Swing traders will hold stocks a matter of a few days, weeks, or even months depending on the momentum of the stock market.  Although swing traders don’t spend quite as much time focused on the stock markets as they are following the momentum of the market this style of trading still requires a great deal of time spent researching and monitoring the markets.

Buy and Hold Traders also called Long Term Traders are stock market investors who are buying stocks and holding them for a long period of time.  This category most likely constitutes the largest group of people who are buying stocks as it requires the least amount of time spent focused on the stock market.  Yes you can have a life and still be a long term investor.  Typically people who fall into this category purchase a stock based on their calculated criterion and hold it for a longer period of time, this could be months to several years.  Of the three styles of investing this category of trader is the only one who may hold a stock during a down point in the stock market believing that once the down trend is over the stock will rise. 

No matter which style of trader you fall into or feel best matches your stock buying interests they all carry risks to your financial well being.  None should be entered into lightly and all require the investor to spend time researching a stock and understanding the company before making any investing decisions.  Thorough research should be done before buying stocks yourself.

Stocks are essentially a small share of a publicly traded company, large or small they’ve all got’em.  Buying these stocks (common shares) makes you a shareholder of each company you purchase with the right to vote on certain decisions.  Not that this matters much but that is one of the things that owning a stock entitles you to.  Virtually every publicly traded company has millions to hundreds of millions of shares so the vast majority of us are not talking about buying a controlling interest here, rather we just want a tiny or more accurately microscopic piece of the pie.   

In most cases we are buying common shares when buying stocks.  Common shares are shares that allow the owner to vote and if dividends are issued by the company receive usually small payments from the company once the preferred shareholders are paid.  Preferred shares as I just alluded to are a higher ranked stock than a common stock.  This means that when dividends are paid they often are paid first, only once they are paid do common shares receive any money from things like dividends.  Incidentally a dividend is just a small payment made by a company when they are doing well.  It is paid on a per stock basis and is usually small.  Generally speaking the larger companies pay bigger dividends.

So now you have a very basic idea of what a stock is how do you buy them?  If you choose to buy and sell stocks on your own you will need some type of online brokerage account.  Doing a thorough Internet search for online brokerages in your country is a prudent move.  With the advent of Internet stock trading the issue of buying what are called board lots is less of an issue than it used to be but still something you need to understand.  A board lot simply put is 100 shares of a stock.  Stocks are usually bought and sold in board lots, that is to say, in multiples of 100 shares.  If the company is large odd lots (a group of shares not a multiple of 100, such as 123 shares) can be bought or sold but with smaller less often traded companies odd lots can be difficult to pick up or unload.  Best practise is to stick to buying stocks in multiples of 100, if you just have to have that monster stock but 100 shares is out of your price range buy in smaller multiples such as 25 or 50 shares but do this sparingly.

There are so many aspects to investing in stocks that you are really doing yourself a favour by reading as much as you can on stock market investing before going out and buying stocks yourself.  Keep in mind though that you are on the right track.  Buying stocks yourself is a great way to grow your investments with knowledge and time you can be successful.