Dividend Calculator
Project your dividend income and portfolio growth over time with reinvestment, contributions, and dividend growth.
How Dividend Investing Compounds
Dividend investing generates income while you hold your shares. When you reinvest those dividends (DRIP), you buy more shares, which then generate their own dividends. Over many years, this compounding cycle can dramatically accelerate portfolio growth.
Dividend growth stocks raise their payout each year, which means your income stream grows even without buying additional shares. Combined with share price appreciation and regular contributions, dividend investing can build substantial long-term wealth.
Frequently Asked Questions
What are dividends?
Dividends are cash payments that companies distribute to shareholders from their profits. They are typically paid quarterly and represent a share of the company's earnings. Not all stocks pay dividends. Companies that do are often mature, profitable businesses with stable cash flows.
Why is dividend yield important?
Dividend yield tells you how much income you receive relative to the stock price. A 4% yield on a $100 stock means you earn $4 per share annually. Comparing yields helps you evaluate income potential across different investments, but always check that the yield is sustainable.
What is the dividend yield formula?
Dividend yield equals the annual dividend per share divided by the current share price, multiplied by 100. For example, if a stock pays $2.00 per year in dividends and trades at $50, the yield is 4%. The yield changes daily as the stock price moves.
What is DRIP (Dividend Reinvestment Plan)?
DRIP automatically uses your dividend payments to purchase additional shares of the same stock. Instead of receiving cash, you get more shares. Over time, this creates a compounding effect where your dividends earn their own dividends, significantly boosting long-term returns.
How do you calculate reinvested dividend payments?
Each dividend payment is divided by the current share price to determine how many new shares you can buy. Those new shares then earn dividends in the next period. This calculator models this year by year, accounting for share price appreciation and dividend growth to give you a realistic projection.