The allure of a consistent income stream from dividend stocks is undeniably tempting, often leading investors to ponder concentrating their entire portfolio in these income-generating assets. Dividend stocks represent shares in companies that distribute a portion of their earnings to shareholders, appealing greatly to those seeking regular cash flow, like retirees, or investors aiming for perceived stability in their holdings.

When you venture into the world of dividend stocks, a fundamental question quickly emerges: how many times a year can you pay dividends as a company, or, more importantly for investors, how often will you actually receive those income payments? Dividends are essentially a portion of a company's profits distributed to its shareholders, serving as a reward for holding the stock.

Many investors operate under the common misconception that if a company increases its dividends, its stock price must inevitably fall. While there's a technical adjustment on the ex-dividend date – the point when a stock begins trading without the value of its next dividend payment – the idea that increasing dividends always leads to a sustained stock price decrease is an oversimplification. Dividends, which are payments made by a company to its shareholders, serve as a way to distribute profits. However, the long-term dividend impact on stock price is far more complex, influenced by a multitude of factors beyond this immediate adjustment.