One of the basic fundamentals of good investing involves making money from dividend-paying stocks. Too often, however, new investors don’t fully understand dividendshow dividends work, and how dividend stocks can add a stream of income to their bank account. The following overview describes the general principles behind making money from these types of investments. Companies have money to fund dividend payments once they earn a profit. The Board of Directorselected by the stockholders, or owners, has a meeting and listens to management’s recommendation about how much of the profit should be reinvested in growth, how much should be used to pay down debt, how much should be used to buy back stockand how much should be distributed out to the owners or shareholders. The last part, the money distributed to the owners, buyung called a dividend.