Eli5: How is money made from stocks?

Question

I understand buy low and sell high, but then what?

If, say the S&P500, keeps growing there is no ‘peak’ to sell at. Do the gains compound? if so how? Or do you just hold it forever and sell when you want to get the money?

In: Economics

Answer 1

Every 3 months you get a dividend which is a percent of the amount of stocks you own. Usually about a half a percent every 3 months. 

So if you own $100,000 worth of stock you get a check of $500 every 3 months  It compounds faster if you use the dividends to purchase more shares.

In addition to that there’s capital appreciation which is the actual price of the stock itself