Dividend Growth Calculator
See how a growing dividend rate transforms long-term income.
| Year | Start Balance | Start Shares | Share Price | Dividend / Share | Dividend Yield | Yield on Cost | Annual Dividend | Total Dividends | End Shares | End Balance |
|---|---|---|---|---|---|---|---|---|---|---|
| 1 | $10,000 | 133.33 | $78.75 | $2.63 | 3.33% | 3.22% | $399.54 | $399.54 | 169.66 | $13,361 |
| 2 | $13,361 | 169.66 | $82.69 | $2.84 | 3.43% | 3.61% | $533.71 | $933.25 | 205.92 | $17,027 |
| 3 | $17,027 | 205.92 | $86.82 | $3.06 | 3.53% | 3.99% | $686.76 | $1,620 | 242.24 | $21,032 |
| 4 | $21,032 | 242.24 | $91.16 | $3.31 | 3.63% | 4.39% | $861.33 | $2,481 | 278.78 | $25,415 |
| 5 | $25,415 | 278.78 | $95.72 | $3.57 | 3.73% | 4.82% | $1,060 | $3,542 | 315.71 | $30,220 |
| 6 | $30,220 | 315.71 | $100.51 | $3.86 | 3.84% | 5.28% | $1,288 | $4,830 | 353.17 | $35,496 |
| 7 | $35,496 | 353.17 | $105.53 | $4.17 | 3.95% | 5.77% | $1,547 | $6,377 | 391.36 | $41,301 |
| 8 | $41,301 | 391.36 | $110.81 | $4.50 | 4.06% | 6.31% | $1,843 | $8,220 | 430.44 | $47,697 |
| 9 | $47,697 | 430.44 | $116.35 | $4.86 | 4.18% | 6.90% | $2,182 | $10,402 | 470.63 | $54,758 |
| 10 | $54,758 | 470.63 | $122.17 | $5.25 | 4.30% | 7.56% | $2,569 | $12,971 | 512.14 | $62,566 |
S&P 500 is included only as a total-portfolio-value reference — it isn't the most meaningful benchmark for income-focused strategies. The 10% baseline reflects the index's long-term nominal total return (price + dividends), a reference rather than a forecast.
What this calculator does
A dividend growth calculator focuses on the variable that does the heaviest lifting in long-horizon income projection: the dividend growth rate (DGR). A starting yield of 3% and DGR of 8% beats a starting yield of 5% and DGR of 2% over any reasonable retirement horizon. The table makes that crossover visible — change the DGR field by a single percentage point and watch the year-25 income column move dramatically.
How to use it
Default DGR is set to 8% and horizon to 25 years to highlight the compounding curve. Adjust DGR to the rate you actually expect: dividend aristocrats historically grow payouts around 6%, broad dividend ETFs more like 7-8%, and high-yielding covered-call funds often closer to 0%. Starting yield matters less than DGR over long horizons but matters a lot at short ones — toggle horizon between 10 and 30 years to see the trade-off.
Frequently asked questions
Where do I get a realistic dividend growth rate?
Historical 5-year and 10-year DGRs are the usual starting points, both published on most stock screeners and ETF fact sheets. Adjust downward as a payout matures (a company growing its dividend 15% for a decade rarely keeps it up for the next decade) and downward again for any business under earnings pressure. Erring conservative is usually wise; the upside surprise is what makes a winner exceptional.
Why does yield on cost matter more than current yield over time?
Yield on cost reflects the income stream relative to what you paid, and it grows every time the dividend grows — independent of what the stock price does. Current yield is reset every day by the market. A long-term holder eventually cares about yield on cost almost exclusively, because that's what their original capital is producing.
Can a high DGR continue indefinitely?
No. Dividend growth eventually slows toward the rate of underlying earnings growth, which for most businesses tops out near GDP growth plus a few percentage points. Modeling 10%+ DGR over 30 years is usually too aggressive even for the strongest growers. Use a stepped model in your head — fast growth for the first decade, slowing growth later — or simply use a blended long-run rate around 6%.
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