Dividend Calculator
Yield, income and reinvestment in one place
How Dividend Investing Works
Dividend yield is the annual dividend per share divided by the share price, and annual income is that dividend multiplied by the shares you own. Yield on cost answers a different question: what the income pays relative to what you actually paid for the shares. A position bought cheap can yield far more on cost than the headline yield suggests, and every dividend raise improves it further.
The projection grows the per-share dividend each year at your growth rate. With reinvestment switched on, each year's income buys more shares at the current price at the end of that year, so the share count and the dividend stream compound together. Switch DRIP off and the same dividend growth applies to a fixed share count, which shows exactly what reinvestment adds.
Three assumptions deserve attention. Dividends are not guaranteed and can be cut. The share price is held constant when reinvesting, so a rising price buys fewer shares and a falling price buys more. And the calculator counts cash dividends only — it does not add price appreciation, which for many growth stocks is the larger part of the return.
Frequently Asked Questions
What is a reasonable dividend yield?
Context matters. Broad market indexes like the S&P 500 yield roughly 1.3-1.6%, while conservative income portfolios often target 2.5-4%. Yields above 6-7% deserve scrutiny: an unusually high payout can signal a falling share price or an unsustainable distribution rather than a genuine bargain.
How are dividends taxed?
Qualified dividends are taxed at long-term capital gains rates (0%, 15% or 20% in the US) if you hold the shares long enough. Ordinary dividends are taxed as regular income. Distributions inside IRAs and 401(k)s are not taxed until withdrawal, which changes how much each dollar actually compounds.
Is reinvesting dividends always the right choice?
Reinvesting is the default for growth-focused investors because it compounds without taxable events inside tax-advantaged accounts. If you need income now, take the cash. In taxable accounts, reinvesting still creates a small tax event on each distribution, so the answer depends on your cash needs and bracket.
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Data Sources & Citations
- OfficialInternal Revenue Service (IRS)
Disclaimer: Calculators and tools on this site are for informational purposes only and do not constitute financial, tax, legal, medical, or investment advice. Results are estimates and may not reflect actual rates or terms. Consult a qualified professional before making decisions. Privacy Policy
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