Dividend Yield Calculator
Calculate your annual dividend income and see how your dividend payments can grow over time with reinvestment and dividend growth.
Dividend investing is a proven strategy for building passive income. This calculator shows how your dividend payments can compound over time, especially when you reinvest them and choose stocks with growing dividends. See the power of dividend growth investing and plan your income strategy for financial independence.
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Total Dividends Received
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Understanding Dividend Investing
What are Dividends?
Dividends are cash payments made by companies to their shareholders, typically from profits. They provide regular income while you hold the stock, creating a passive income stream.
The dividend yield is the annual dividend payment divided by the stock price, expressed as a percentage. A 4% yield means you receive $4 annually for every $100 invested.
Dividend Growth Investing
- • Focus on companies that increase dividends annually
- • Reinvest dividends to compound your returns
- • Look for sustainable payout ratios (under 60%)
- • Consider dividend aristocrats and kings
- • Balance yield with dividend growth potential
Frequently Asked Questions
What is dividend yield and how is it calculated?
Dividend yield is the annual dividend payments divided by the stock price, expressed as a percentage. For example, if a stock pays $2 annually in dividends and trades at $50, the dividend yield is 4%.
What's considered a good dividend yield?
A good dividend yield typically ranges from 2-6%. Higher yields (7%+) may indicate risk or unsustainability, while very low yields might not provide sufficient income. Focus on sustainable yields from quality companies.
Should I reinvest dividends or take them as cash?
Reinvesting dividends (DRIP) typically produces better long-term returns through compounding. Take cash dividends if you need current income or want to rebalance your portfolio manually.
Are high dividend yields always better?
Not necessarily. Very high yields may signal financial trouble or an unsustainable dividend. Look for companies with growing dividends, strong financials, and payout ratios below 60-80%.
What are dividend aristocrats and dividend kings?
Dividend Aristocrats are S&P 500 companies that have increased dividends for 25+ consecutive years. Dividend Kings have increased dividends for 50+ years. Both represent reliable dividend payers.
How do taxes affect dividend income?
Qualified dividends are taxed at capital gains rates (0%, 15%, or 20% depending on income). Non-qualified dividends are taxed as ordinary income. Consider holding dividend stocks in tax-advantaged accounts.
Can dividend yields change over time?
Yes, dividend yields fluctuate with stock prices and dividend payments. Companies may increase, decrease, or suspend dividends based on their financial performance and business needs.
What's the difference between dividend yield and total return?
Dividend yield only measures income from dividends. Total return includes dividends plus stock price appreciation. A 3% dividend yield plus 5% price growth equals 8% total return.