How this calculator works
Each year the shares you own pay the current dividend per share. With reinvestment on, dividends buy more shares at that year's price; otherwise they're held as cash. Your annual contribution buys shares too, then the share price and dividend grow at the rates you set.
Worked example
With the example values below: Ending value, $104,277 ($33,826 in dividends paid). Change any number above to run your own.
What you enter
| Input | Example |
|---|---|
| Initial investment | $10,000 |
| Annual contribution | $1,200 |
| Dividend yield | 3.5% |
| Dividend growth / yr | 5% |
| Share price growth / yr | 4% |
| Years | 20 yrs |
| Reinvest dividends? | Yes |
How dividend income grows
Dividend investors benefit from three growth engines at once: more shares from reinvested dividends, higher dividends per share as companies raise payouts, and a rising share price. The calculator projects all three, plus any new money you add each year.
A $10,000 position yielding 3% pays $300 in year one. If the dividend grows 6% a year and you reinvest, the yearly income can more than triple over 20 years even without new contributions.
Yield vs. dividend growth
High-yield stocks pay more today, but their dividends often grow slowly, and a very high yield can be a sign the market expects a cut. Dividend growth stocks start with lower yields but raise payouts steadily. Over long periods, a 2.5% yield growing 8% a year can overtake a 5% yield growing 2%.
Look at the payout ratio, dividends as a share of earnings, to judge whether a dividend is sustainable. Ratios well above 75% for most companies leave little room for error.
Key dividend dates
Share prices typically drop by about the dividend amount on the ex-dividend date, so buying just before it doesn't create free money.
- Declaration date: the company announces the dividend.
- Ex-dividend date: you must own the shares before this date to receive the dividend.
- Record date: usually the same day or one business day after the ex-date.
- Payment date: the dividend is paid.
Frequently asked questions
What is a dividend yield?
The annual dividend per share divided by the share price. A stock paying $2 a year in dividends and trading at $50 has a 4% dividend yield. When the price falls the yield rises, so a very high yield can signal that the market expects a dividend cut.
What is a DRIP?
A dividend reinvestment plan automatically uses each dividend to buy more shares, often including fractional shares, instead of paying cash. Those new shares earn dividends of their own, which is how reinvesting compounds over time.
How are dividends taxed?
Qualified dividends are taxed at the long-term capital gains rates of 0%, 15% or 20%. To qualify you generally must hold the shares for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Other dividends are taxed as ordinary income. Reinvested dividends are taxed the same as cash dividends.
How much do I need to invest to earn $1,000 a month in dividends?
Divide $12,000 a year by the portfolio yield. At a 3% yield that's $400,000; at 4%, $300,000. Higher yields need less capital but often come with slower dividend growth or more risk.
Should I reinvest dividends?
If you don't need the income, reinvesting usually grows wealth faster, because new shares earn dividends of their own. Retirees living on income often take dividends as cash instead.
Grow what this calculator projects.
TruthSayer AI sends quantitative stock signals across valuations, earnings and dark-pool activity, each one traded in its own funded account first.
Estimates for planning only, not financial, tax or legal advice. Tax tools use 2026 federal figures (brackets, $16,100 / $32,200 standard deduction, $19,000 gift exclusion, $15M lifetime exemption). Rates shown as defaults are examples; replace them with quotes you actually receive.