This article was originally posted on Seeking Alpha by an author unaffiliated with Capital Investment Advisors.

One of the least discussed topics among financial pundits on TV and in the newspapers is the power of reinvested dividends. It seems that business channels, in an effort to drive ratings, would rather talk about the stock that doubles in price from $15 to $30 as opposed to focusing on solid companies that throw off ever-growing amounts of cash to shareholders on a quarterly basis, year-in and year-out. Whenever someone like Jim Cramer pumps a stock, he’ll throw in that it also has a 3-4% dividend as if it’s an afterthought.

To get an idea of how powerful dividend reinvestment can be, let’s take a look at the performance of Altria stock over the past three years. As most Altria (MO) shareholders remember quite well, the company divested its international tobacco arm (Philip Morris International) and snack business (Kraft) to focus on the domestic cigarette market several years ago. Altria shed Kraft Foods (KFT) on March 30, 2007, and broke up with Philip Morris International (PM) on March 28, 2008. Let’s pretend that your hypothetical-self decided to invest $10,000 in the standalone company, Altria Group, in April 2008. The stock was trading in the $21-$22 range then, so let’s split the difference and assume you called your broker or went online to place a buy order for 465 shares of MO at $21.50.

Fast forward two months, and you are collecting your first dividends from Altria, in the amount of $0.29 per share. This gives you the option for $134.85 in cash, which you decide to plow back into the dividend reinvestment plan to increase your overall stake in the company by acquiring more shares. Altria closed at $20.72 that day, and you find yourself the owner of 6.51 new shares of Altria, bringing your total to 471.51 shares of Big Mo.

This article was originally posted on Investopedia by an author unaffiliated with Capital Investment Advisors.

Income investing, which aims to pick companies that provide a steady stream of income, is perhaps one of the most straighforward stock-picking strategies. When investors think of steady income they commonly think of fixed-income securities such as bonds. However, stocks can also provide a steady income by paying a solid dividend. Here we look at the strategy that focuses on finding these kinds of stocks.  

Who Pays Dividends?

Income investors usually end up focusing on older, more established firms, which have reached a certain size and are no longer able to sustain higher levels of growth. These companies generally no longer are in rapidly expanding industries and so instead of reinvesting retained earnings into themselves (as many high-flying growth companies do), mature firms tend to pay out retained earnings as dividends as a way to provide a return to their shareholders.  

Thus, dividends are more prominent in certain industries. Utility companies, for example, have historically paid a fairly decent dividend, and this trend should continue in the future.