Companies don't like to decrease or stop their dividend payments because they know many investors own the stock only because of the dividend. They want that income, and some rely on it. Companies don't like to see their stocks go down, which is what happens when too many shareholders sell it, so management is most reluctant to cut or stop dividends. Many companies have paid dividends for decades.

As investors, dividends can greatly enhance the performance of a portfolio, especially if the dividend is meaningful. For example, if you have dividends from your stocks that yield 4% a year, you only need your stocks to appreciate in price by 6% and you reach 10% a year in growth. In seven years, you'll double the value of your portfolio. On the other hand, if prices go down 5%, and you have a 4% yield, then you only have lost 1% for the year.

Some of the basics of dividends: They are paid quarterly in the vast majority of cases. You must buy a stock before the ex-dividend date to receive the current quarter's dividend. In most cases the ex- date (ex means without) is anywhere from two months to the day before the stock actually pays the dividend (called pay date). You can find all the specific dates for any stock on AOL's Money and Finance page. Just enter the company's ticker symbol in the box on the upper right hand corner and hit "get quote."

On the day the stock goes ex-dividend, the price of the stock is reduced by that amount. So if the stock is trading at $10 at the close of business on the day before the ex-dividend date and the stock pays 25 cents for the quarterly dividend, then the stock will open at $9.75 on the ex-dividend date unless there is some news that affects it. Some investors think they can buy the stock the day before the ex-dividend date, get the dividend, then sell the stock and make money from the dividend alone. There is no free lunch in the market. The stock price will reflect the dividend payment on the ex-dividend date.

When you buy a stock for the dividend, be sure it's relatively safe that the dividend will continue. You can determine that by looking at the Payout Ratio. That's the ratio that tells you what percentage of profits is being used to pay the dividend. Usually less than 50% is a good indicator that the dividend will be paid for more than one or two more quarters.

Also, don't reach for yield. The higher the yield, the more risk there is in the investment. That's why the dividend is so high: it's to attract investors to take the risk inherent in the stock. The higher the risk of the dividend not being paid in the future, the higher the yield.

One more thing: right now, dividends are taxed at a rate of 15%, not as normal income.

For lists of industries and their highest yielding stocks, please see The Online Investor (www.theonlineinvestor.com) or keyword: OLI on AOL.