Dividend yield and DRIP calculator
A dividend's yield tells you what a stock pays today. What it does for you over time depends on whether the dividend grows and what you do with the cash. Project both reinvesting and taking the money, and see the difference.
Dividend yield
4%
$405.94 in the first year
- Final value
- $51,352.27
- +413.52% total return
- Total dividends
- $21,885.79
- Income in the last year
- $2,301.52
- 23.02% yield on cost
- Shares at the end
- 468.73
- From 200
| Year | Shares | Dividends | Value |
|---|---|---|---|
| 1 | 207.92 | $405.94 | $10,811.93 |
| 2 | 216.24 | $443.18 | $11,694.13 |
| 3 | 224.97 | $484.02 | $12,653.06 |
| 4 | 234.14 | $528.83 | $13,695.81 |
| 5 | 243.79 | $578.00 | $14,830.17 |
| 6 | 253.92 | $631.98 | $16,064.68 |
| 7 | 264.58 | $691.27 | $17,408.73 |
| 8 | 275.8 | $756.42 | $18,872.66 |
| 9 | 287.61 | $828.04 | $20,467.82 |
| 10 | 300.04 | $906.81 | $22,206.71 |
| 11 | 313.14 | $993.46 | $24,103.09 |
| 12 | 326.94 | $1,088.83 | $26,172.10 |
| 13 | 341.49 | $1,193.86 | $28,430.44 |
| 14 | 356.84 | $1,309.55 | $30,896.51 |
| 15 | 373.03 | $1,437.06 | $33,590.60 |
| 16 | 390.13 | $1,577.64 | $36,535.12 |
| 17 | 408.18 | $1,732.72 | $39,754.77 |
| 18 | 427.25 | $1,903.86 | $43,276.87 |
| 19 | 447.41 | $2,092.81 | $47,131.59 |
| 20 | 468.73 | $2,301.52 | $51,352.27 |
For education only, not investment advice. Results are estimates based on what you enter, and they leave out anything not shown, such as slippage and most taxes. Check the numbers with your broker or a licensed professional before acting on them.
The formula
- Dividend yield
- annual dividend per share / share price
- Yield on cost
- current annual income / original amount invested
- Shares bought by a DRIP
- shares x dividend per payment / share price
Worked example
You invest $10,000 in a $50 stock paying $2 a year in quarterly dividends. You assume the dividend grows 5% a year, the price grows 4% a year, and you reinvest for 20 years.
- Yield: $2 / $50 = 4%
- Starting shares: $10,000 / $50 = 200
- Shares after 20 years of reinvesting: 468.73
- Final value: 468.73 x $109.56 = $51,352.27
Reinvesting ends at $51,352.27, compared with $35,137.61 if you take the dividends as cash and let them sit uninvested. Income reaches $2,301.52 in the last year, a 23.02% yield on your original money.
A high yield can be a warning
Yield rises when the share price falls, so a very high yield often means the market expects a cut. Before relying on one, check the payout ratio, which is the share of earnings or free cash flow paid out, and read how the company has handled its dividend in weak years. A growing dividend at a modest yield can overtake a static high one within a decade.
The projection here assumes steady growth in both the dividend and the price. Real companies cut, freeze and raise dividends, and neither number will hold for 20 years. Treat the table as a way of comparing assumptions.
Taxes and timing
In a US taxable account, dividends are normally taxed in the year they are paid, even if a DRIP reinvests them, so keep enough cash to cover the bill. Retirement accounts handle this differently. This calculator shows results before tax.
To receive a dividend you have to own the shares before the ex-dividend date. Share prices usually drop by about the dividend on that date, so buying just before it doesn't produce free money.
Frequently asked questions
How do I calculate dividend yield?
Divide the annual dividend per share by the current share price. A $50 stock paying $2 a year yields 4%. For the annual figure, multiply a quarterly dividend by four, or use the last twelve months' total.
What is a DRIP?
A dividend reinvestment plan uses each dividend to buy more shares automatically, often including fractional shares and usually without a commission. Most large brokers offer it as a setting.
What is yield on cost?
It's today's annual income divided by what you originally invested. It rises as dividends grow and as a DRIP adds shares, so it can reach high figures on old positions, but it says nothing about whether the stock is attractive now.
How does the calculator time reinvestment?
Each payment buys shares at the projected price on its date, with the price growing steadily between payments. Real purchases happen at whatever the market price is on the payment date.