Dividend Growth Calculator
A dividend growth calculator projects how a dividend payment rises over time at a given annual growth rate. It shows the income a holding today could pay in future years if the company keeps increasing its dividend. A constant dividend growth rate is a scenario, not a promise. Companies can slow, pause, or cut dividends when earnings, cash flow, or capital priorities change.
Estimate income
Adjust the assumptions. Results update in your browser only.
Projected results
Annual dividend, year 20
$3,870
Total projected income
$43,865
Starting dividend
$1,000
Projection milestones
Income grows from the annual dividend growth rate you enter.
| Year | Income | Reinvested | Yield on cost | Value |
|---|---|---|---|---|
| 1 | $1,070 | $0 | 107% | $1,000 |
| 5 | $1,403 | $0 | 140.3% | $1,000 |
| 10 | $1,967 | $0 | 196.7% | $1,000 |
| 20 | $3,870 | $0 | 387% | $1,000 |
How the Dividend Growth calculator works
This projection isolates dividend growth. It does not model reinvestment, share-price changes, valuation, or whether the company can fund the future payout.
The calculator treats your current annual dividend as the starting payout and compounds it by the annual growth rate for each projected year. It totals the yearly income so you can see both the future payout and cumulative income.
dividend_year_t = starting_dividend * (1 + growth_rate)^t
total_projected_income = sum(dividend_year_t)
yield_on_cost = dividend_year_t / starting_dividend- Year 1 applies one year of dividend growth to the current annual dividend.
- The growth rate compounds, so small changes can create large differences over long horizons.
- No DRIP or tax rate is applied because this calculator focuses on the rising payout itself.
What is a good dividend growth rate?
For dividend-growth investing, the growth rate is the key assumption. Mature, reliable payers often grow dividends in the mid-single digits, while double-digit growth usually needs strong earnings growth and may not last. Review SEC filings for cash flow, payout ratios, and leverage before assuming a high growth rate. For more definitions, visit the finance glossary.
When to use it
Helpful for
- Estimating future income from a holding with a history of payout increases.
- Comparing low-yield, high-growth dividend stocks with higher-yield slower growers.
- Planning whether income may keep up with inflation over a long holding period.
Can mislead when
- The company is cyclical, highly leveraged, or near a payout limit.
- Dividend increases came from a one-time rebound rather than durable earnings growth.
- You need a total-return forecast that includes price movement and reinvestment.
Common mistakes
- Extending a recent high growth rate far into the future without checking earnings support.
- Comparing dividend growth without also considering starting yield.
- Treating a long dividend increase streak as protection against a future cut.
- Ignoring inflation when deciding whether future income is enough.
Year-by-year example
The default growth example starts with a current annual dividend and compounds the payout at a constant growth rate. Default inputs: $1,000 current annual dividend, 7% annual dividend growth, and a 20-year horizon.
In this payout-growth view, yield on cost compares each projected dividend with the starting annual dividend baseline.
| Year | Dividend income | Reinvested | Yield on cost | Ending value |
|---|---|---|---|---|
| 1 | $1,070 | $0 | 107% | $1,000 |
| 5 | $1,403 | $0 | 140.3% | $1,000 |
| 10 | $1,967 | $0 | 196.7% | $1,000 |
| 20 | $3,870 | $0 | 387% | $1,000 |
Frequently asked questions
Mature, reliable payers often grow dividends in the mid-single digits per year; dividend aristocrats have raised payouts for 25 or more consecutive years. Double-digit growth is possible but hard to sustain, so durability of growth usually matters more than the headline rate.
Yield is the income relative to today's price; dividend growth is how fast that payout rises over time. A lower-yield stock that grows its dividend quickly can out-earn a high-yield stock that does not.
A rising dividend lifts your income and your yield on cost over time, and it often signals a healthy, growing business. It is a key driver of long-run income for buy-and-hold investors.
No. Growth rates slow as companies mature, and dividends can be frozen or cut in downturns. Treat a constant-growth projection as a scenario, not a guarantee.
Screen for dividend growers
Use the screener to pair dividend growth with profitability, cash flow, and valuation.