Yes there's something you're missing. The thing to do is use whatever money you make from dividends to buy more shares, and keep doing that, along with regular share purchases. Then over time you'll start to receive bigger and bigger dividend payments and it can become a great passive income. But you want to buy shares only in companies that (1) have a long history of paying dividends and (2) have a history of increasing their dividend per share regularly. This method while it does take time is very very profitable. And btw the best companies to buy shares in are not necessarily the ones with the highest priced shares. You'd be better off owning more shares of a modestly priced stock that pays a higher percentage per share.

Dee, you're correct that investing solely for dividends is not a worthwhile strategy for most people (other than those desiring a steady, predictable income).

For the rest of the population, where dividend stocks pay off is not only the ability to earn 3% per year, but to eventually sell that stock for an equal or greater value than the original purchase price. For example, you purchased 5,000 shares for $10,000, earn a year of dividends at 3% ($300), then sell your stock for $20,000. Eventually it all comes back to stock price appreciation, for most investors.

You are missing the fact that the majority of people invest more than $100!!

Calculate 3% of $500,000 and more and maybe you will get the point.

Don't forget your portfolio of shares if intelligently constructed should grow over the years as well.

If there was no point then it wouldn't be done. It is done so there must be a point to it!!

We live in a capitalist society!

Let's say you buy your $100 worth of shares, and these shares track the average gains of the stock market.

Each year you could expect to see a 10% (compounded) increase in the overall value of your shares. After..,

1 year, your shares have grown to $110.00

5 years, your shares have grown to $161.05

10 years, your shares have grown to $259.37

20 years, your shares have grown to $259.37

25 years, your shares have grown to $672.75

30 years, your shares have grown to $1744.94

40 years, your shares have grown to $4525.93

50 years, your shares have grown to $11739.09

Of course, in the time that you hold your shares the company might fail - but it may also exceed your wildest dreams. To lower your losses on companies that may drop-dead, you're expected to either do a lot of research yourself, or pay someone to do it for you. As a beginning investor, you may be able to allow your investment to lie, or you can add to it each month - progressively building a diversified share portfolio.

The assumption in the above figures is simply that you reinvest your dividends, buying more stocks and subsequently getting more dividend each year. The above figure includes your dividend PLUS any gains made by an increase in stock price.

If you were to hold your money in a bank paying a miserable 2% per annum, you might walk away after 50 years with $290

It should be stated that investing in the stock market is considered risky - you may lose every penny you invested. By researching deeply into each company you invest in, you must balance up the future-income you forecast for this company against the dangers of that company going bust.

I suggest you look to an investing book in the 'For Dummies' or 'For Idiots' range - find these at your local lending library or on Amazon

Whats the point of making money? Answer that and you should answer your question.

Ok I know that people can buy a share of a share of stock for say, $100. If the dividend is 3%, you only earn $3 a year, right? What is the point of this if you're only gonna make $3 a year? It doesn't seem like a good investment to me. Is there something i'm missing? Im a beginner to this. Thank you.