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Dividend Growth Calculator

See how a growing dividend compounds your income over the years.

How it is calculated

The dividend is raised by the same percentage every year, and each raise is applied to the already-raised amount: future income = annual_dividend × (1 + growth_rate ÷ 100)years. The increase is future income − annual_dividend and the total growth is (future income ÷ annual_dividend − 1) × 100. The starting dividend is the total you receive per year (for example the sum of four quarterly payments), not a per-share figure unless you hold one share. Years may be fractional. Only the figure at the end of the period is shown, not a year-by-year table, and the tool does not value the stock or reinvest dividends. A growth rate of zero keeps the income flat, and a negative rate models cuts, with the sign first (for example -$481.52). The starting dividend must be above zero, years cannot be negative and the rate must stay above −100%; otherwise there is no result.

Worked example

Your portfolio pays 1200 a year in dividends, and you expect them to grow 6% each year for 10 years. Step 1: yearly growth factor = 1.06. Step 2: raise it to the tenth power: 1.0610 = 1.7908. Step 3: future income = 1200 × 1.7908 = $2,149.02 a year. Step 4: increase = 2149.02 − 1200 = $949.02, or 79.08% total growth. Simple addition of 6% a year would only give 60%, the rest comes from raises on earlier raises.

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Common mistakes

  • Adding the yearly rate instead of compounding it. Ten years at 6% is not 60% growth; it is 79.08%, because each raise builds on the last.
  • Entering a per-share dividend and reading the result as total income. The figure scales only with what you type, so use your total annual dividends or the number for one share consistently.
  • Assuming the growth rate will stay fixed for decades. Companies cut, freeze or raise dividends unevenly, so use a cautious rate and test a lower one.
  • Ignoring inflation. A 3% annual rise only keeps pace with 3% inflation, so the real growth in the example is smaller than 79%.
  • Entering the growth as a fraction (0.06). The field is in percent, so enter 6.

About this calculator

This calculator shows how dividend income grows over time from a starting annual payout and a fixed annual growth rate, compounding the increase each year — the same growth assumption that underlies the Dividend Growth Model (a variant of the Gordon Growth Model), which values a stock based on its expected stream of rising payouts. This calculator does not value a stock; it only projects the payout. Even a modest growth rate compounds meaningfully over a long holding period, since each year's raise is calculated on an already-larger base.

Dividend growth investors specifically target companies with long histories of consistent dividend increases — sometimes decades running, as with so-called Dividend Aristocrats — because a rising payout on shares bought years earlier can produce a yield on original cost far higher than the stock's current yield, and provides a growing income stream that helps offset inflation. Grow a starting annual dividend at a yearly rate for a number of years and you see the dividend at the end, the rise over the starting payout and the total growth in percent.

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