How to use this calculator
- Enter the Amount invested and the current Dividend yield.
- Set Dividend growth per year and Share price growth per year, then any Monthly contribution.
- Choose the number of Years and whether to Reinvest dividends or take them as cash.
- Read the yearly dividend income at the end, the portfolio value, total dividends and monthly income; the table shows each year.
How the projection works
Each year the calculator multiplies the portfolio value by the current yield to get dividends. The portfolio then grows with price growth, plus any contributions, plus dividends if you reinvest them. The yield for the next year is updated so dividends grow at your dividend-growth rate while the price grows at its own rate.
Divₜ = Vₜ₋₁ · yₜ₋₁ Vₜ = Vₜ₋₁ · (1 + g) + 12·C + Divₜ (if reinvested)- V = portfolio value at the end of the year
- y = dividend yield that year, updated each year by (1 + dividend growth) ÷ (1 + price growth)
- g = share price growth per year
- C = monthly contribution
- Div = dividends received that year
That means the yield on your original cost can rise even if the quoted yield stays modest, which is the idea behind dividend-growth investing.
Example: $20,000 at a 4% yield for 15 years
With 5% yearly dividend growth, 4% price growth and reinvestment, year-one dividends are $800. After 15 years the portfolio is worth $65,962 and pays $2,779 a year ($231.54 a month). You will have received $23,919 in dividends along the way.
If you take dividends as cash, year-one income is still $800 but the portfolio reaches only $36,019, and the final yearly income is $1,584. The $17,263 in cash is not reinvested, so it does not compound.
Contributions, time and growth rate
Adding $300 a month to the default case lifts the final portfolio to $166,589 and yearly dividends to $6,866. Running the default for 30 years instead of 15 reaches $238,332 and $11,514 a year. Time and regular contributions do more than a slightly higher starting yield.
Yield and growth interact: a 2% yield with 10% dividend growth ends at $2,248 a year after 15 years, below the 4% / 5% case, so a higher growth rate does not automatically beat a higher starting yield over a short period.
How to use the result
Use the final monthly income to see how close dividends come to a spending goal, then compare with a withdrawal approach in the FIRE calculator or the retirement calculator. For a total return view that includes price changes, try the stock profit calculator.
Do not judge a stock only by yield. A very high yield can signal that the market expects a dividend cut. Check payout ratios, earnings and the company's history before relying on payments.
Mistakes to avoid
- Chasing the highest yield without checking whether the dividend is covered by earnings.
- Assuming dividends are guaranteed; companies can reduce or suspend them.
- Forgetting taxes on dividends, which vary by country and by account type.
- Putting too much into one company or sector for the sake of income.
- Ignoring fees, which reduce the real return.
Assumptions and limits
The model uses constant growth rates, annual dividends paid at the start of the year's growth, no taxes, no fees and no cut dividends. Real portfolios fluctuate, and dividends are not guaranteed. Reinvestment is assumed to buy shares at the average price with no costs.
It is an illustration, not a forecast or investment advice. Consider your goals and speak to a licensed adviser if you are unsure.
Frequently asked questions
How much do I need to invest to earn $1,000 a month in dividends?
Divide $12,000 by the yield. At a 4% yield that is $300,000, but dividend growth over time lowers the amount you need today.
Should I reinvest dividends?
Reinvesting buys more shares and compounds growth, so the portfolio and later income are larger. Take cash if you need the income now.
What is dividend growth?
It is the yearly increase in the dividend a company pays per share. Rising dividends can lift your income without you buying more shares.
Are dividends taxed?
In most countries yes, and often at different rates depending on the type of dividend and account. Check the rules that apply to you.