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Then there are companies like Bank of America which pays a hefty dividend, grows its business every year and buys its own stock back regularly.
Yakk, you kind of gave a simplified description for a very complex transaction.
Utilities are an example of stocks whose main goal is to pay dividends. They produce steady streams of income and don't particularly try to 'grow their business'.
Taxes are an entirely different discussion. Dividends paid into a tax-free account (IRA) are not taxed until taken out. The tax rate is unknown until that time.
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