Dividend Calculator
Estimate your dividend income, model DRIP reinvestment growth, and see your yield on cost over time.
Results — Year 1
Annual Dividend Income
$3,500
Monthly Income
$291.67
Quarterly Income
$875
After 20 Years
Portfolio Value
$307,326
Total Dividends Received
$207,326
Annual Income at Year 20
$28,540
Yield on Cost
28.54%
Estimates assume constant yield and growth rate. Actual dividends vary and are not guaranteed.
How to Calculate Dividend Income
Dividend income is the cash paid to shareholders from a company's earnings. The most important number is dividend yield— annual dividends per share divided by the stock's current price, expressed as a percentage. A stock trading at $50 that pays $1.75 in annual dividends has a dividend yield of 3.5%. Multiplied by your total investment, that gives your annual income: $100,000 × 3.5% = $3,500 per year, or about $875 per quarter.
The real power of dividend investing comes from dividend growth. Companies like Dividend Aristocrats — those that have raised dividends for 25+ consecutive years — often grow payouts at 5–8% annually. On a 3.5% starting yield with 5% annual growth, your annual income doubles roughly every 14 years even without adding new capital. After 20 years, a $100,000 portfolio generating $3,500 today would produce over $9,300 annually.
DRIP (Dividend Reinvestment Plans) accelerate growth further by automatically using your dividends to purchase additional shares. Instead of taking $3,500 in cash, DRIP buys more shares, which then generate their own dividends. This compounding loop — dividends buying shares, those shares paying dividends — is what transforms a modest starting yield into a growing income stream over decades. With DRIP enabled, that same $100,000 at 3.5% yield and 5% annual dividend growth reaches approximately $290,000 in portfolio value after 20 years.
Yield on costmeasures what you earn relative to what you originally paid — not today's market price. If you invested $100,000 and your dividends now total $9,300 per year, your yield on cost is 9.3%. This metric rewards patience: long-term dividend investors often reach double-digit yield on cost while seeing modest yield percentages for new buyers at higher prices.
Frequently Asked Questions
What is a good dividend yield?
For individual stocks, a yield between 2% and 6% is generally considered healthy — high enough to provide meaningful income but not so high that it signals financial distress. Yields above 8–10% are often unsustainable and may indicate an impending dividend cut. Broad market ETFs like VYM or SCHD typically yield 3–4%. For income-focused investors, a combination of a moderate current yield and consistent dividend growth tends to outperform chasing the highest yield.
How does DRIP work?
A Dividend Reinvestment Plan (DRIP) automatically uses your dividend payments to buy additional shares of the same stock or fund, usually commission-free and sometimes at a slight discount. Instead of receiving cash, you receive fractional shares. Over time, DRIP investors accumulate more shares with each payout, which in turn produce more dividends — a compounding cycle that significantly boosts long-term returns. Most brokerages let you enable DRIP per holding in your account settings.
Are dividends taxed?
Yes. Qualified dividends — from U.S. corporations and certain foreign companies, held for more than 60 days — are taxed at long-term capital gains rates: 0%, 15%, or 20% depending on your income. Ordinary dividends (non-qualified) are taxed as regular income. Dividends inside a Roth IRA are tax-free; inside a traditional IRA or 401(k) they are deferred until withdrawal. If you are in the 22% or higher ordinary income bracket, holding dividend stocks in tax-advantaged accounts can meaningfully increase after-tax returns.
What is the difference between dividend yield and dividend growth rate?
Dividend yield is a snapshot — what the stock pays today relative to its current price. Dividend growth rate measures how fast those payments are increasing year over year. A stock with a 2% yield and 10% growth rate will outpace a 5% yield with 0% growth within about seven years, and dramatically so after ten. Investors with long time horizons often favor dividend growth stocks over high-yield stocks for this reason, as the total income compounds to a much larger figure over decades.