💰FINANCIAL GAMES💰

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DIVIDENDS & YIELD

Understanding Dividends: Stocks vs Crypto Yield

Both stocks and crypto tokens can generate passive income, but they work very differently. Learn how traditional dividends compare to crypto yield and staking.

SELECT TYPE

VISUAL REPRESENTATION

STOCK DIVIDEND FLOWCOMPANYEARNINGS$100,000BOARDDECIDESPAY DIVIDENDDIVIDEND$1.00/SHAREQUARTERLYSHAREHOLDER 1SHAREHOLDER 2

WHAT ARE STOCK DIVIDENDS?

Dividends are payments made by a company to its shareholders, typically from profits. They represent a share of the company's earnings distributed to owners.

HOW IT WORKS

1
Company earns profits from operations
2
Board of directors decides to pay dividends
3
Dividend amount is declared per share
4
Payment is made on a regular schedule (quarterly, monthly, etc.)
5
Shareholders receive cash or additional shares
6
Dividends are taxable income

TYPICAL YIELD

Typically 1-5% annually

Based on annual dividend payments divided by stock price

KEY CHARACTERISTICS

•
Paid from company profits
•
Not guaranteed (company can reduce or stop)
•
Typically paid quarterly
•
Amount varies based on company performance
•
Requires holding shares on ex-dividend date
•
Taxed as ordinary income or qualified dividends
•
Can be reinvested automatically (DRIP)
•
Some companies have dividend growth history

✅ Advantages

  • Passive income stream
  • Sign of company financial health
  • Can compound through reinvestment
  • Some tax advantages (qualified dividends)
  • Predictable for dividend aristocrats
  • No additional work required

❌ Limitations

  • Not guaranteed - can be cut or eliminated
  • Company may prioritize growth over dividends
  • Taxable income in the year received
  • Dividend yield may be low (1-4% typical)
  • Stock price may drop on ex-dividend date
  • Requires significant capital for meaningful income

EXAMPLES

Apple (AAPL) - ~0.5% yield
Microsoft (MSFT) - ~0.7% yield
Johnson & Johnson (JNJ) - ~3% yield
AT&T (T) - ~7% yield

DIRECT COMPARISON

Feature
Stock Dividends
Crypto Yield
Source of Income
Company profits
Network fees, inflation, protocol rewards
Typical Yield
1-5% annually
3-20%+ APY (varies widely)
Payment Frequency
Quarterly (most common)
Daily or continuous
Guarantee
Not guaranteed (can be cut)
Not guaranteed (protocol risk)
Participation Required
Just hold shares
Must stake or provide liquidity
Tax Treatment
Taxable income (qualified or ordinary)
Taxable as income (varies by jurisdiction)
Minimum Investment
1 share (can be $100+)
Any amount (fractional tokens)
Liquidity
Can sell shares anytime
May have lock-up periods
Risk Level
Moderate (company performance)
Higher (smart contracts, volatility)

KEY SIMILARITIES

Passive Income

Both provide a way to earn income from assets you own without active trading.

Compounding

Both can be reinvested to compound returns over time.

Not Guaranteed

Neither dividends nor crypto yield are guaranteed - both carry risk.

Taxable Income

Both are generally considered taxable income in most jurisdictions.

Requires Capital

Both require you to own the underlying asset (stocks or tokens).

Market Dependent

Both are influenced by market conditions and underlying asset performance.