Dividend Calculator

What this calculator answers

If you hold a dividend-paying investment for a number of years, how much income does it pay, and what is the holding worth at the end? You can reinvest the dividends, so that each payment buys more shares, or keep them as cash, outside the portfolio value. Every input and result is described in the next section.

How to use this calculator

The calculator shows how much a dividend-paying holding pays, and what it is worth, after a chosen number of years at a fixed yield and fixed growth rates.

What to enter

• Initial investment: the amount you start with. It can be 0 if you add a regular contribution. Default 10,000. It is hidden when Start from is set to “A number of shares”.
• Dividend yield: the yearly dividend as a percentage of the starting share price, from 0% to 50%. Default 4%.
• Annual dividend growth: how much the dividend per share changes each year, from -50% to 50%. A negative rate lowers it every year. Default 0%.
• Annual share price growth: how much the share price changes each year, from -50% to 50%. Default 0%.
• Regular contribution: the amount you add each period. Default 0. It is added at the end of each year unless you change Contribution frequency under Advanced options.
• Investment period: how long you hold the investment, in whole years from 1 to 100. Default 10.
• Reinvest dividends: Yes, reinvest (the default) uses each payment to buy more shares. No, keep as cash keeps the payments outside the portfolio.

Advanced options

The next six fields sit in the Advanced options group. At their defaults they leave the result exactly as it would be without them.

• Start from: An amount of money (the default) uses Initial investment. A number of shares replaces it with the next two fields, the starting amount becomes the shares times the price, and the Table tab of the result details adds a Shares and a Share price column.
• Number of shares: the shares you hold at the start, from 0 to 1,000,000,000, fractions included. Default 100.
• Starting share price: the price of one share at the start, from 0.01 to 10,000,000. Default 100. With the default 100 shares that is the same 10,000 as the default Initial investment, so switching gives the same result.
• Dividend payout frequency: how often the holding pays its dividend: Yearly (the default), Twice a year, Quarterly or Monthly. Each payment is the yearly dividend divided by the number of payments.
• Contribution frequency: how often the regular contribution is made: Weekly, Every two weeks, Monthly, Quarterly or Yearly (the default). Each contribution is made at the end of its period.
• Tax on dividends: a flat rate on the dividends, from 0% to 60%. Default 0%, no tax.

What the results mean

• Dividends in the final year: the dividends paid in the last year of the period, after tax on the dividends, if a tax rate is set. This is the headline figure.
• Dividend per payment in the final year: the final year’s dividends divided by the number of payments, so the average payment. With reinvesting, each payment is a little larger than the one before.
• Total dividends: every dividend paid over the period, added up, after tax on the dividends, if a tax rate is set.
• Tax on dividends: the total tax taken from the payments over the period.
• Portfolio value: what the shares are worth at the end of the period, at the final share price, after tax on the dividends, if a tax rate is set. Dividends kept as cash are not included.
• Total invested: the starting amount plus every regular contribution.
• Yield on cost: the final year’s dividends divided by the total invested, as a percentage, after tax on the dividends, if a tax rate is set.

The per-payment and tax rows appear only when they are used, each with its own sentence under the headline: Dividend per payment in the final year when dividends are paid more than once a year, and Tax on dividends when a tax rate is set. The worked examples below go through the main options, and “How it’s calculated” lists the formula and its sources.

Worked examples

Reinvesting for 10 years. Invest $10,000 at a 4% yield, with no dividend growth, no share price growth and no contributions, and reinvest the dividends for 10 years. These are the calculator’s defaults. The portfolio grows to $14,802.44. Of that, the dividends paid over the ten years add up to $4,802.44. In the tenth year alone the holding pays $569.32, more than it paid in the first year, because reinvested dividends bought extra shares that paid dividends of their own.

Quarterly payouts. Change only Dividend payout frequency to Quarterly. Each payment, a quarter of the 4% yearly dividend or 1% of the holding, is now reinvested as soon as it is paid instead of at the year end. In the tenth year the holding pays $580.95, which is $145.24 a payment on average. The dividends add up to $4,888.64 over the ten years and the portfolio grows to $14,888.64, which is $10,000 × 1.01^40: 1% compounded 40 times (4 payments a year for 10 years). That is slightly more than the $14,802.44 of yearly payments, because each payment starts earning dividends sooner.

Monthly contributions with a yearly payout. Money added between two dividend payments earns the next payment only for the part of the period it was held. Take $100 a month from nothing for one year at 4%, paid once a year: an Initial investment of 0, a Regular contribution of 100, an Investment period of 1 and a Contribution frequency of Monthly. The year’s one payment is $22.00 on the $1,200.00 put in. That is 4% of $550, the amount held on average over the year: the first month’s contribution is held for 11 months, the second for 10, and so on, and the last, made on the payment date itself, is not counted in that payment. Start from $10,000 instead and keep the $100 a month for 10 years, reinvesting: Total invested is $22,000.00, the dividends add up to $7,473.91, and in the tenth year the holding pays $1,108.61.

A tax on dividends. Go back to the defaults and set Tax on dividends to 15%. The tax leaves 85% of every payment to reinvest, so the holding grows at 4% × 0.85 = 3.4% a year. The tenth year pays $459.37 after tax, the dividends kept add up to $3,970.29, and the portfolio grows to $13,970.29, which is $10,000 × 1.034^10. The Tax on dividends row shows $700.64 taken over the ten years.

The formula

The calculator works per share, as if one share cost 1 at the start, and follows every payment and contribution date through the year. In year k the yearly dividend per share is dₖ, and p(τ) is the share price at time τ, in years since the start.

dₖ = y·(1 + g)^(k − 1),  p(τ) = (1 + a)^τ,  D = (1 − T)·(N + W)·dₖ / m,  N ← N + (D + C) / p(τ),  V = N·p(t)

Here y is the dividend yield, g the annual dividend growth, a the annual share price growth and t the number of years. The dividend per share changes once a year, while the price changes smoothly, so every purchase uses the price on its own date.

m is the number of dividend payments a year and q the number of contributions a year. D in this block is one payment: the shares held, N + W, times dₖ / m, less the tax at rate T, which is 0 unless you set one. The Math tab uses D for the final year’s total instead, the sum of its payments, D = D₁ + … + Dₘ. N is the number of shares, counted as if each cost 1 at the start, so it begins at the starting amount P. Each purchase adds the money spent divided by the price on that date: the payment D if you reinvest, and the regular contribution C on each of its q dates. Without reinvesting, D is left out of that line and kept as cash. V is the final shares times the final price. When you start from a number of shares, the Table tab’s Shares column is N ÷ Q and its Share price column is Q·p, with Q the starting share price.

W counts the shares bought since the last payment, each weighted by the part of the payment period it was held: a share bought halfway between two payments counts as half a share at the next payment. Those shares stay in W, not yet in N, until that payment, and only then join N. A contribution made on a payment date joins N straight away, after that payment, so with the defaults W is always 0. This pro-rata rule is this site’s own, derived from the textbook formulas it reduces to when contributions and payments share a schedule. With no growth and reinvested payments, the holding then grows as F = P(1 + r/n)^(nt), with r the yield and n the payments a year (LibreTexts, College Mathematics for Everyday Life §5.3), and contributions made on every payment date add the future value of regular deposits (LibreTexts, Math for Liberal Arts §8.4).

The tax is taken from each payment before it is reinvested because the IRS treats dividends used to buy more stock as income that must still be reported (Publication 550). The Tax on dividends row adds up the tax taken from every payment, which the Math tab writes as X = Z·T / (1 − T), with Z the total dividends after tax. One flat rate is the calculator’s simplification: it does not separate qualified dividends, the ordinary dividends that are taxed at the lower capital gain rates (IRS Topic 404), from the rest, and it does not look up tax brackets.

Yield on cost is the final year’s dividends divided by everything invested, the starting amount plus q contributions of C a year for t years: Y = D / (P + C·q·t). This is the calculator’s own definition.

What the result does not include

The growth rates, the regular contribution and the tax rate stay the same for every year, which real investments rarely do. The yield is the yield on the starting price. Because the dividend per share grows at the dividend growth rate and the price at the price growth rate, the yield on the current price changes from year to year unless the two rates are equal; if it rises above 25 % in any year, the calculator shows a warning. Payments fall at equal intervals, the last one at the end of each year, and the payments within a year are equal per share, whereas real companies set their own dates and amounts. A tax rate, if you set one, is a single flat rate on the dividends; tax you might owe when you sell is not included. Reinvestment buys at the price on the payment date, with no fees, and allows fractional shares, which not every broker offers. The figures describe the rates you enter, not a forecast of what any holding will pay.