Dividend stocks are popular with people who want regular cash payments from their investments. Morningstar notes that many investors rely on those payments as a source of passive income. Others take a total-return approach to meet their spending needs, and some combine the two.
Exchange-traded funds (ETFs) that hold dividend-paying stocks are one way to pursue either approach. Below is why they appeal to many investors, three examples worth understanding, how reinvested dividends can work when prices fall, and how to put a Morningstar rating in context.