Income Stock

Income stocks pay high dividends and the companies are generally in a maturity stage in respect to their industrial life cycle. Stocks from companies that have already established a pattern of dividend payments larger than average can be defined as income stocks.

Income stocks tend not to revalue as blue-chip stocks, because the income stock companies are more mature and don’t grow at the same rhythm as blue-chip companies. This doesn’t mean that income stock companies are not productive o that are going to be out of business. On the contrary, they have profits and steady cash incomes, but choose to pay higher dividend rates over their earnings opposite to other companies.

Utility companies and Real Estate Investment Trusts (REITs) are an example of income stocks. American Electric Power (ticker symbol AEP) can be included in these examples with a $1.40 dividend and a performance dividend of 3.97% - Ameren Corp. (ticker symbol AEE) with a dividend of $2.54 and a performance dividend of 5.1%; and Nisource (ticker symbol NI) with a dividend of $0.92 and a performance dividend of 4.11%. These dividends over earnings and performance dividends quoted in December 23, 2004 are based in the market price of the day.

The average of performance dividends for Standard & Poor?s Index (S&P) listed stocks was 1.46% in December 22, 2004. Annaly Mortgage Management Trust, a mortgage REIT paid $2 dividend per share with a 9.4% yield. REITs are obligated to deliver most part of its earnings to shareholders because they are pass-through entities for the purposes.