Methodology & Data Sources
This calculator projects future dividend income based on your initial investment and expected dividend yield. The Dividend Yield is the percentage of your investment returned annually. The Annual Dividend Growth Rate models how companies increase their dividend payouts over time.
Yield on Cost is calculated by taking the projected annual dividend income in any given year and dividing it by your original initial investment amount. This metric highlights the power of dividend growth investing—as companies raise dividends, your return relative to your initial capital invested increases significantly.
The sample stock data provided in the interactive table is sourced from Yahoo Finance and reflects real market prices and yields at the time of calculation.
Frequently Asked Questions
How is dividend yield calculated?
Dividend yield is calculated by dividing the annual dividend paid per share by the current share price, then multiplying by 100 to express it as a percentage. For example, if a company pays $2 annually and trades at $50, the yield is 4%.
What is yield on cost?
Yield on cost represents your annual dividend income divided by your original investment amount. If a company raises its dividend over time, your yield on cost increases even if the current market yield stays the same.
How does dividend growth affect income?
When companies consistently raise their dividends, your annual income grows organically without requiring additional capital investment. This compounding effect significantly boosts long-term total returns.
Are dividends guaranteed?
No. Dividends are declared by a company's board of directors and can be cut or suspended if the company faces financial difficulties or decides to retain cash.
Why do high dividend yields sometimes indicate risk?
A very high yield can sometimes be a 'dividend trap,' indicating that the market expects the dividend to be cut, causing the stock price to drop significantly. Always review the payout ratio and earnings history.