Understanding Equity Income: What Are Dividends?

The term "equity income" is another way of describing company dividends. Dividends paid to shareholders by the company would become equity income for you, the shareholder. Other income can be interest earned in your brokerage (equity) account.

Mutual funds sometimes name their portfolios "income" funds when they seek out high-dividend-paying companies. These stocks are considered high-quality stocks during certain times when growth is negligible in the economy. Research has shown that equity funds that add income-producing investments generally perform better than their peer groups who focus only on growth companies.