Dividend Calculator
Calculate your annual dividend income, yield on cost, and how much wealth you'd build by reinvesting every dividend (DRIP) over time.
$50,000 invested in stocks yielding 3.5% generates $1,750/year in dividends. With DRIP (dividend reinvestment) and 5% annual dividend growth, that same investment produces $5,847/year in dividends after 20 years — and the portfolio grows to $186,000. Reinvesting dividends is one of the most powerful wealth-building strategies.
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Dividend Calculator
Investment · Yield · DRIP · Dividend growth · Years
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Your investment
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% /yr
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years
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Results
Annual dividend income (year 1)
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Monthly income (year 1)
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Annual dividend income (final year)
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Total dividends received
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Portfolio value at end
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Total return (portfolio + dividends)
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How it's calculated
DRIP: dividend reinvestment compounding
Year 1 dividend = Investment × yield%
With DRIP:
Portfolio(t) = Portfolio(t-1) × (1 + price_growth%) + dividend(t)
Dividend(t) = Portfolio(t-1) × yield% × (1+div_growth%)^t
Without DRIP:
Portfolio(t) = Initial × (1 + price_growth%)^t
Dividend(t) = Initial × yield% × (1+div_growth%)^t
Yield on cost = Current annual dividend / Original cost × 100
- 1First-year dividends—
- 2Dividends in the final year—
- 3Total dividends collected—
- 4Final portfolio value—
- Dividend yield
- Annual dividends per share ÷ current share price. A 3.5% yield on $100 stock = $3.50/year in dividends.
- DRIP (Dividend Reinvestment Plan)
- Automatically reinvests cash dividends to buy more shares, compounding returns without additional capital.
- Yield on cost (YoC)
- Annual dividend income ÷ original cost. A 3% yield on a stock bought 20 years ago may now have 10% yield on cost after dividend growth.
- Payout ratio
- % of earnings paid as dividends. <60% is generally sustainable for most sectors.
Disclaimer: assumes constant growth rates. Actual dividends can be cut or suspended. Diversify across sectors to reduce single-stock dividend risk.
Frequently asked questions
What is a good dividend yield?
2–4% is typical for quality dividend stocks (S&P 500 average ≈ 1.5%). Yields above 6–7% may signal a dividend cut risk — the yield is "high" because the stock price has fallen. Always check the payout ratio and earnings coverage.
Should I reinvest dividends (DRIP)?
Almost always yes, when you're in accumulation mode. DRIP amplifies compounding by putting dividends to work immediately. Exception: when in retirement and living off income, cash dividends provide spending money without needing to sell shares.
Are dividends taxed?
Yes. In the US: qualified dividends are taxed at 0/15/20% (capital gains rates, lower than income tax). Ordinary dividends are taxed at your income tax rate. In tax-advantaged accounts (IRA, 401k), dividends compound tax-deferred or tax-free.