DDanfio

Dividend Calculator

A dividend is a share of profit paid out in cash, usually every quarter. The yield tells you what that payment is worth against the price today, but the number that matters over decades is the yield on cost: the payment measured against the price you originally paid.

$

The current price per share.

$

Add up the quarterly payments to get the annual figure.

Average annual increase in the dividend per share.

Qualified US dividends are taxed at 0%, 15% or 20% depending on income. Enter 0 for a retirement account.

Results update as you type. Nothing leaves your device.

Dividend income in year 20

$4,746.41

1,118 shares paying $4.04 each

Yield on cost
23.73%
Yield at today price
4%
Position value
$78,420
Dividends received
$35,130

Where the final position comes from

  • The shares you bought$35,070
  • Bought with dividends$43,350

Each dividend buys more shares, and those shares pay the next dividend: the position compounds without any money being added.

Year by year

YearSharesDividend per shareNet incomeShares boughtPosition valueYield on cost
1517$1.60$68017$20,6804%
2534.9$1.68$73817.92$22,0394.34%
3553.8$1.76$80218.9$23,5024.72%
4573.8$1.85$87219.95$25,0795.13%
5594.8$1.94$94821.07$26,7805.58%
6617.1$2.04$1,03222.27$28,6166.07%
7640.6$2.14$1,12523.55$30,5996.62%
8665.6$2.25$1,22624.92$32,7437.21%
9692$2.36$1,33726.39$35,0627.87%
10719.9$2.48$1,46027.97$37,5748.59%
11749.6$2.61$1,59529.67$40,2969.38%
12781.1$2.74$1,74431.49$43,24910.26%
13814.5$2.87$1,90833.45$46,45411.22%
14850.1$3.02$2,08935.56$49,93612.29%
15887.9$3.17$2,28937.83$53,72413.47%
16928.2$3.33$2,51140.29$57,84614.77%
17971.2$3.49$2,75642.93$62,33716.21%
181,016.9$3.67$3,02745.79$67,23417.81%
191,065.8$3.85$3,32848.88$72,58019.58%
201,118$4.04$3,66352.22$78,42021.55%

Yield on cost rises even when the dividend yield on the current price stays flat: the same dividend is being measured against the price you originally paid.

Reinvesting against taking the income

After the periodReinvestedTaken as income
Shares held1,118500
Annual dividend income$4,746$2,123
Value of the shares$78,420$35,070
Cash dividends receivedIncluded above$22,485
Shares plus cash$78,420$57,555

Reinvesting produces 55.3% more annual income at the end than spending the dividends, because the shares bought with the earlier dividends keep paying. The trade-off is that the income was not available to spend along the way.

Income at other dividend growth rates

Dividend growthFinal annual incomeDividends receivedPosition value
0%$1,338$17,997$58,645
3%$2,820$26,407$68,446
5%$4,746$35,130$78,420
7%$8,207$48,058$92,978
10%$20,009$81,912$130,380

Dividend growth is the quiet variable. A 5% raise on the dividend compounds to roughly two and a half times the starting payment over twenty years, while a frozen dividend stays where it is.

What the same position would pay at other yields

Dividend yieldDividend per shareAnnual income today
0.02%$0.80$400
0.03%$1.20$600
0.04%$1.60$800
0.05%$2.00$1,000
0.06%$2.40$1,200

A higher yield is not automatically better: it often signals a share price that has fallen, or a payout the company may have to cut.

500 shares at $40.00 produce $800 in the first year, which is 4% on today price and 23.73% on what you paid by the end of the period. Dividends are not guaranteed: a company can cut or suspend the payment, and the share price usually falls when it does.

This calculator projects the income from a holding, reinvests the dividends in more shares when you ask it to, grows the dividend and the share price at the rates you enter, and compares the result with taking the same dividends as cash.

How this dividend calculator works

Yield and yield on cost

Yield is the annual dividend per share divided by the current share price. It moves every day as the price moves, even when the dividend is unchanged. Yield on cost is the same dividend divided by the price you paid, so it only rises when the company raises its payment.

That is why a long-held position can show a 9% yield on cost while the quoted yield is 3%. The two numbers describe the same dividend from different starting points, and only the second one belongs to you.

What reinvesting does

A dividend reinvestment plan, or DRIP, uses each payment to buy more shares. Those shares pay the next dividend, so the share count grows even though no new money is added. Over twenty years at a 5% dividend growth rate, the reinvested shares often account for a third of the final income.

A DRIP is not free of tax in a regular account: the dividend is taxable in the year it is paid, whether or not it is reinvested. In an IRA or 401(k) the payment is sheltered until withdrawal, which is one reason dividend investors hold these positions in retirement accounts.

What is assumed

Dividends are paid once a year in the arithmetic and reinvested at that year average price; the effect on a quarterly payer is small because the price used is the same. The dividend per share and the share price grow at constant rates, and the tax rate is applied to the dividend before reinvestment.

Dividend cuts, suspensions, reinvestment discounts, foreign withholding tax and the difference between qualified and ordinary dividends are not modelled. A cut is not unusual: many companies reduce or suspend payments in a recession, which is exactly when the income matters most.

Worked examples

Each example below was run through the calculator on this page when the site was built, so the numbers match what you see when you enter the same inputs.

500 shares at $40 with a $1.60 dividend, reinvested

Shares held
500
Share price
$40.00
Dividends per share, per year
$1.60
Dividend growth
5%
Share price growth
3%
Years held
20
What happens to the dividends
Reinvested in more shares (DRIP)
Tax on dividends
15%

Dividend income in year 20

$4,746.41

1,118 shares paying $4.04 each

Yield on cost
23.73%
Yield at today price
4%
Position value
$78,420
Dividends received
$35,130

A 4% starting yield and a 5% dividend growth rate compound into a much higher yield on cost, and the reinvested shares carry a growing share of the final income.

The same holding with the dividends spent

Shares held
500
Share price
$40.00
Dividends per share, per year
$1.60
Dividend growth
5%
Share price growth
3%
Years held
20
What happens to the dividends
Taken as income
Tax on dividends
15%

Dividend income in year 20

$2,122.64

500 shares paying $4.04 each

Yield on cost
10.61%
Yield at today price
4%
Position value
$35,070
Dividends received
$22,485

The share count never changes, so the income grows only as fast as the dividend does. The difference between this and the reinvested case is the price of spending the income instead of compounding it.

A higher yield with no dividend growth

Shares held
800
Share price
$25.00
Dividends per share, per year
$1.50
Dividend growth
0%
Share price growth
2%
Years held
15
What happens to the dividends
Reinvested in more shares (DRIP)
Tax on dividends
15%

Dividend income in year 15

$2,307.53

1,538 shares paying $1.50 each

Yield on cost
11.54%
Yield at today price
6%
Position value
$50,746
Dividends received
$21,469

A 6% yield looks better than a 4% one until the growth is counted: with no increase in the payment, the income only grows through the shares bought with earlier dividends.

Frequently asked questions

How do I calculate dividend income?

Multiply the shares you hold by the dividend paid per share. Quarterly payers declare a per-share amount each quarter, so add the four payments to get the annual figure. 500 shares paying $0.40 a quarter receive $800 a year before tax.

What is a good dividend yield?

There is no single answer, but a very high yield deserves a question rather than admiration: it often means the price has fallen sharply, or that the payout is larger than the company can sustain. Compare the yield with the payout ratio, the track record of the payment and the growth rate of the dividend itself.

Are dividends taxed even if I reinvest them?

In a regular brokerage account, yes. The dividend is income in the year it is paid, and a DRIP does not defer the tax. Qualified US dividends are taxed at 0%, 15% or 20% depending on taxable income, with the 3.8% net investment income tax on top above the threshold; ordinary dividends are taxed at the same rate as your other income.

What happens to my dividends in an IRA?

They are sheltered: no tax is due in the year they are paid, and reinvested dividends compound untaxed. Traditional accounts are taxed on withdrawal, Roth accounts are not taxed at all if the rules are met. Set the tax rate to zero for a retirement account.

Can a dividend be cut?

Yes, and boards do it when earnings fall or when they need cash for something else. A cut usually knocks the share price too, which is why a portfolio built for income should hold several payers across sectors rather than a single high yield.

Does this calculator cover monthly dividend payers?

It works in annual steps, so a monthly payer is entered as the total paid over twelve months. That is accurate for the annual income and the reinvestment total, and slightly approximate only in the timing within a year.

How do dividend growth and price growth interact?

A company that reinvests in the business may grow the dividend quickly with a modest price rise, or vice versa. Over long periods the two usually move together, because a dividend that keeps rising without earnings growth eventually becomes unsustainable. Enter both rates to see how much of the outcome depends on each.

Assumptions and sources

  • Dividend arithmetic: annual income = shares × dividend per share, yield = dividend ÷ price, yield on cost = dividend ÷ the price originally paid, and a DRIP adds income ÷ price shares each period.
  • Qualified dividend rates of 0%, 15% or 20% by taxable income and the 3.8% net investment income tax: IRS Topic 409 (capital gains and losses) and IRS Topic 559 (net investment income tax).
  • This is not investment advice. Dividends are not guaranteed, the rates entered are assumptions rather than forecasts, and a historical record of raising the payment says nothing about the next one.
  • Not modelled: dividend cuts, withholding tax on non-US holdings, reinvestment discounts, the distinction between qualified and ordinary dividends, and the effect of share buybacks on a per-share payment.

Last reviewed 2026-09-14. This page is an estimate tool, not financial, tax or legal advice.Read the full disclaimer.

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