How to use the dividend calculator
Enter how much you are investing, the share price and the current dividend yield of the stock or fund. Then add your assumptions: how fast the dividend grows each year, how fast the share price grows, how long you will hold, how much you will add every month, and whether you reinvest dividends. The calculator simulates the portfolio month by month and shows your dividend income in the final year, total dividends collected, portfolio value and yield on cost.
- Dividend yield – annual dividends per share ÷ share price. Find it on any quote page, or calculate it from the last four quarterly payments.
- Dividend growth – the average yearly increase in the dividend per share. Long-standing dividend growers have often raised payouts by mid-single digits per year, but past growth is not guaranteed.
- Price growth – affects the price at which contributions and reinvested dividends buy shares, and the value of the portfolio.
- Dividend frequency – most US stocks and ETFs pay quarterly; some funds and REITs pay monthly.
Dividend formulas
Dividend yield = Annual dividend per share ÷ Share price
Annual dividend income = Shares owned × Annual dividend per share
Yield on cost = Annual dividend income ÷ Total amount invested
Each payout date the calculator pays shares × (annual dividend ÷ payments per year), subtracts your dividend tax rate, and — if reinvestment is on — buys more shares at that month's price. The dividend per share is raised once a year by your dividend growth rate. The full method is on our methodology page.
Worked examples
High yield vs. dividend growth
Two $50,000 investments with dividends reinvested for 20 years and 4% price growth: a 6% yielder whose dividend grows 1% a year ends paying about $8,863/year, with a portfolio worth $267,925. A 2.5% yielder growing its dividend 9% a year ends paying about $14,109/year, worth $240,509. The high yielder pays more income in the early years and, because it reinvests more, ends with the larger portfolio; the dividend grower overtakes it on income as its payout compounds. Change the years to see when that crossover happens for your own numbers.
Building an income stream from scratch
Start with $5,000, add $500 every month to a fund yielding 3.5% with 6% annual dividend growth, and reinvest everything. After 25 years you would have contributed $155,000, and the portfolio would pay about $2,474 a month — a 19.15% yield on what you put in.
How much do you need to invest for $1,000 a month?
To earn $12,000 a year in dividends today, before taxes, you would need roughly:
| Dividend yield | Amount invested for $1,000/month |
|---|---|
| 2% | $600,000 |
| 3% | $400,000 |
| 4% | $300,000 |
| 5% | $240,000 |
Chasing a higher yield lowers the amount you need on paper but often comes with slower dividend growth, less price appreciation and a higher risk of cuts. Diversifying across many dividend payers, for example with a dividend ETF, reduces the impact of any single company cutting its payout.
Things the projection cannot know
- Dividend cuts. Companies can reduce or suspend dividends, as many did in 2020.
- Changing yields. The market yield moves with the share price; this model keeps dividend growth and price growth separate and constant.
- Fund expenses. ETF yields are usually quoted after expenses, but check the fund's documents.
- Exact dates. To receive a dividend you must own the shares before the ex-dividend date; the model spreads payouts evenly through the year.
To see exactly how much reinvesting adds compared with taking dividends as cash, use the DRIP calculator. To model a fixed investment schedule, try the DCA calculator.
Frequently asked questions
How do I calculate dividend income?
Annual dividend income = number of shares × annual dividend per share. Equivalently, it is the amount invested × the dividend yield. For example, $20,000 invested at a 3.5% yield pays about $700 a year, or roughly $58 a month, before taxes.
What is a good dividend yield?
Broad US stock indexes have yielded roughly 1–2% in recent years, many dividend-focused ETFs yield about 3–4%, and some individual stocks and funds yield 6% or more. A very high yield can signal that the market expects a dividend cut, so look at the payout ratio and dividend history, not just the yield.
What is yield on cost?
Yield on cost is your current annual dividend income divided by the total amount you invested. As a company raises its dividend, your yield on cost rises even if the current market yield stays the same. The calculator shows yield on cost for every year of your projection.
How much do I need to invest to earn $1,000 a month in dividends?
Divide the annual income you want ($12,000) by the dividend yield. At a 3% yield you need about $400,000; at 4% about $300,000; at 5% about $240,000 — before taxes. Contributions and dividend growth over time can reduce how much you need to invest up front.
Are dividends taxed?
In a taxable US brokerage account, qualified dividends are taxed at the long-term capital gains rates of 0%, 15% or 20% depending on your income, and non-qualified (ordinary) dividends at your regular income tax rate. Higher earners may also owe the 3.8% net investment income tax. Dividends inside an IRA or 401(k) are not taxed when paid. Use the tax field to model your situation.
Not financial advice. These figures are hypothetical and assume a constant rate of return. Real investments go up and down, past performance does not predict future results, and taxes and fees vary. Consider speaking with a licensed financial professional before making investment decisions. See our full disclaimer.