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Dividend Calculator

Updated · By the CalculatorDash editorial team · How we check our maths

Quick answer

Dividend income is your investment × dividend yield. $100,000 at a 4% yield pays $4,000 a year (about $333 a month). Reinvesting dividends with 5% yearly dividend growth and 3% price growth for 15 years turns that into roughly $16,400 of yearly income.

Dividend income

$
%
%
%
years

Yearly dividend income now

$4,000

Per month
$333
Yearly income at the end
$16,374
Portfolio value at the end
$306,774
Yield on original cost at the end
16.4%

A projection with steady growth rates; real dividends can be cut and prices fall. Taxes on dividends are not included.

How this calculator works

A dividend yield is the yearly dividend divided by the share price. Multiply it by the amount you invest and you have the income before tax. That part is simple; the interesting part is what happens over time.

Companies with a record of raising dividends grow the payout each year, and if you reinvest the dividends (a DRIP) you also buy more shares every year. The two effects multiply, so income can grow much faster than the dividend growth rate alone. This calculator projects that with steady growth assumptions so you can see the shape of it.

A very high yield is often a warning rather than a bargain: it can mean the market expects a cut. Look at the payout ratio and the company's cash flow, not only the yield.

The formula

Income now
investment × yield
Yield on cost later
yield × (1 + dividend growth)^years
With reinvestment
shares grow each year by roughly the current dividend yield on the new price

Worked example

$100,000 at a 4% yield pays $4,000 a year, or $333 a month. With 5% dividend growth, 3% price growth and dividends reinvested for 15 years, the income grows to about $16,400 a year and the portfolio to about $307,000.

Tips

  1. 01Hold dividend investments in tax-advantaged accounts where you can, to avoid tax on each payout.
  2. 02Spread across sectors; dividend-heavy portfolios can be concentrated in a few industries.
  3. 03Check the payout ratio. Paying out more than 70–80% of earnings leaves little room for growth.

Frequently asked questions

How much do I need to invest to earn $1,000 a month in dividends?

$12,000 a year ÷ yield. At 4% that is $300,000; at 3% it is $400,000.

What is a good dividend yield?

For broad markets 1.5–4% is normal. Above 6–7% look closely at why the yield is high.

What is DRIP?

A dividend reinvestment plan that automatically buys more shares with each dividend, compounding your holding.