Dividend Calculator
Project your investment growth with dividend reinvestment.
Ending Value
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—Ending Income
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—Total Growth
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—Portfolio Longevity
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Growth Projected Balance
Retirement Projected Balance
Projection Summary
Total Price Growth
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Total Dividend Income
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Contributions
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Withdrawals
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Customize Projections
Dividend Calculator Input, Output, and Explanations
High-quality input values are essential for accurate projections because a calculator is based on the principle of “garbage in, garbage out.” Realistic figures for growth and yield lead to a better model. However, remember that the longer the projection period, the more unreliable the results become, as market conditions and dividend policies are impossible to predict decades out.
Dividend Calculator Core Inputs
Starting Value
What is the total initial investment value in your portfolio or security?
Annual Contributions
Will you make regular contributions to your investment?
Starting Dividend Yield
What is the annual percentage paid by the security? It is unrealistic to expect payments to exceed 10% over the long term. Currently, the dividend yield on the S&P 500 is approximately 1.5%.
Price Appreciation
In addition to dividend growth, hopefully, the price of your shares also increase. It is reasonable to expect between 6 and 8%. Keep in mind the total Share Price Growth and Dividend Yield should not exceed 12-15%.
Dividend Growth Rate
A good dividend payer will increase their payment each year. 3 to 5% is a good starting point. Growth ahead of inflation keeps your purchasing power growing.
Maximum Dividend Yield
High combinations of dividend yield, growth rates, and/or a long time period will create unrealistic yields. We recommend a maximum to produce more realistic estimates.
Dividend Calculator Output
Ending Value
The total value of your portfolio at the end of your projection.
Ending Income
The total annual income estimate based on the ending value.
Total Growth
The total percentage growth over the entire projection period. This is an unannualized percentage.
Portfolio Longevity
The projected age at which your portfolio will run out. When the value of your withdrawals exceeds your value.
Projection Summary
Total Price Growth
The increase in your portfolio’s value due to price appreciation.
Total Dividend Income
Your total dividend income collected over the entire projection period.
Contributions
A total of all contributions over the entire projection.
Withdrawals
A total of all withdrawals when retirement mode is activated.
Retirement Mode
Current Age
Your current age and the start of the projection.
Retirement Age
The age at which you will begin withdrawals.
Life Expectancy
The age at which you expect to pass away.
Withdrawal Type
Choose from Fixed Amount, % of Portfolio, or % of Dividend Income.
See the Importance of Dividends and their Compound Growth
The income a dividend portfolio produces can offer a steady payment, provide a hedge against rising inflation, or give you compounding benefits over time. It shouldn’t be a surprise that interest in dividend investing has been on the rise.
In periods of slow growth, a majority of your portfolio’s return can come from dividends. Reinvesting these dividends will add to the compound growth over the long term. Compound interest is a phenomenon that dictates how your portfolio will grow in the future if you reinvest your current profits. This aspect of investing is amplified when dealing with dividend stocks since you are actually paid cash. Consistent reinvestment amplifies future payments.
The amazing thing about compound interest is that if you continue to reinvest your profits year after year, your annual dividend income will actually increase exponentially. This means that your income will grow faster in the future. Compound dividend growth and reinvestment will allow you to reach your goals sooner.
You Move What You Measure
If your goal is to increase your dividend income over time, you can only move what you measure. Our dividend income calculator not only allows you to see where you are, but also allows you to gauge what changes you may need to make to maximize your future results.
By tweaking the information that you enter in the Dividend Calculator, you can model and project different scenarios. For example, increasing the Annual Dividend Yield by even one percent will have a significant impact on your overall returns. An increase in the Dividend Growth Rate will also positively affect your income.
The role share price plays on your overall return is a little more complicated. Your overall profits come from a combination of dividend payments and gains in the stock’s price. Each component is calculated separately in our dividend calculator. In other words, an increase in the stock’s price will not move the yield higher. In fact, the yield will actually decline if the dividend payment does not also increase.
Most Common Mistakes
Overestimating Growth Rates
Starting with aggressive yields or growth rates will generate an overly optimistic result. Maintaining a high yield with annual growth can be incredibly difficult for a company. Accurate, conservative inputs into the dividend calculator should produce the most accurate future estimates.
Treating the Result as Fact
The figures presented by our dividend income calculator are an estimate based on the input you’ve entered. A lot of unexplained or unpredictable things can happen between now and the end of your projections. Be cautious with the results and remember nothing is guaranteed. Also, any modeling of results beyond 10 years can create some fantastic, but unrealistic results. The range of possibilities, both good and bad, grows with each year of your projection.
Frequently Asked Questions
Dividend Calculator:
Your Questions Answered
Q. Is the final projected balance a guaranteed result?
No, it is an estimate based on the input data you’ve added. Actual results will vary. These projections don’t factor in unexpected changes like a large withdrawal or failed investment. These projections are only as good as the data you enter into the formula. As the timeframe of your projections increases, the accuracy declines.
Q. How is compounding factored into the calculation?
The initial calculations of this calculator assume dividend reinvestment annually. You can model dividend withdrawals using the “Retirement Mode”. Here, you can factor in dividend income withdrawal by using a fixed amount, a percent of the portfolio, or a percent of the dividend income.
Q. Why do I need to input a Dividend Growth Rate?
Historically, companies like to increase their dividend payments each year. This is one of the biggest factors that allows dividend income to keep up with inflation. A growth rate of under 5% is the most common and sustainable.