How the dividend Calculator works
Each year the calculator pays a dividend equal to your balance times the current yield, then reinvests it if DRIP is on, applies share price growth, and adds your contributions. The dividend yield itself drifts each year by your dividend growth rate relative to price growth, which mirrors how yield on cost behaves for real dividend growers.
Annual dividends = Balance × Yield | Next yield = Yield × (1 + dividend growth) ÷ (1 + price growth)
Example: $10,000 invested at a 3% yield pays about $300 in year one. With $500 added monthly, 5% dividend growth, 4% price growth, and DRIP on, the portfolio passes $300,000 in 20 years, with about $78,000 of that coming purely from dividends.
Frequently asked questions
How is dividend income calculated?
Annual dividend income equals your portfolio value multiplied by the dividend yield. A $10,000 portfolio with a 3% yield pays about $300 per year, and this calculator repeats that step every year as your balance and yield change.
What is DRIP and why does it matter?
DRIP stands for dividend reinvestment plan. Instead of taking dividends as cash, they buy more shares, and those shares pay their own dividends. Over long periods this compounding becomes a major share of total returns.
What dividend growth rate should I use?
A common planning range is 3% to 7% per year for established dividend growers. Check the actual 5 and 10 year dividend growth history of the stock or fund you own.
Does this account for taxes?
No, results are pre-tax. Qualified dividends in the US are typically taxed at 0%, 15%, or 20%, and dividends inside a Roth IRA can be tax free, so after-tax results depend on your situation.