How much dividend income can an investment generate?
Dividend yield measures annual dividend income relative to the current share price. Income depends on the dividend per share and the number of shares owned, while future income can also change through dividend growth and reinvestment.
This calculator keeps dividend growth and share-price growth separate. With DRIP enabled, after-tax dividend payments buy additional shares at the modeled price, so future dividends can grow from both a higher dividend per share and a larger share count.
Frequently asked questions
What is dividend yield?
Dividend yield is annual dividend per share divided by share price. A $2 annual dividend on a $40 share price equals a 5% yield.
How does DRIP change dividend income?
With reinvestment enabled, net dividend payments purchase additional shares. Those extra shares can receive future dividends, creating a compounding effect.
Does a higher dividend yield mean a better investment?
No. Yield alone does not measure business quality, dividend sustainability, price risk, taxes or total return. This calculator models the assumptions you enter; it does not rank investments.
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