Dividend calculator with reinvestment (DRIP)
Project dividend income from a starting amount and monthly purchases: yield, dividend growth, price growth, tax and reinvestment.
Because dividends and the price grow at different rates, the yield moves from 4,00 % to 5,88 % by the end.
Dividend income per year, after tax
Year by year
| Year | Value | Income after tax | Yield on cost |
|---|---|---|---|
| 1 | 14 367,26 € | 412,77 € | 3,0 % |
| 2 | 19 033,89 € | 578,88 € | 3,4 % |
| 3 | 24 026,52 € | 762,44 € | 3,7 % |
| 4 | 29 374,50 € | 965,28 € | 4,0 % |
| 5 | 35 110,12 € | 1 189,46 € | 4,2 % |
| 6 | 41 268,98 € | 1 437,31 € | 4,5 % |
| 7 | 47 890,34 € | 1 711,37 € | 4,9 % |
| 8 | 55 017,58 € | 2 014,53 € | 5,2 % |
| 9 | 62 698,61 € | 2 350,01 € | 5,5 % |
| 10 | 70 986,47 € | 2 721,41 € | 5,9 % |
| 11 | 79 939,86 € | 3 132,79 € | 6,3 % |
| 12 | 89 623,88 € | 3 588,69 € | 6,7 % |
| 13 | 100 111 € | 4 094,23 € | 7,2 % |
| 14 | 111 481 € | 4 655,15 € | 7,7 % |
| 15 | 123 823 € | 5 277,93 € | 8,2 % |
| 16 | 137 236 € | 5 969,89 € | 8,8 % |
| 17 | 151 832 € | 6 739,26 € | 9,5 % |
| 18 | 167 733 € | 7 595,37 € | 10,2 % |
| 19 | 185 078 € | 8 548,77 € | 10,9 % |
| 20 | 204 019 € | 9 611,41 € | 11,7 % |
A dividend or distribution is paid out of the fund's or company's value. Judge income by total return (price + payouts), not by yield. Companies can cut dividends, usually when prices also fall.
Monthly steps: the price and the dividend per share grow at constant rates and dividends are paid monthly at 1/12 of the annual amount; no fees or currency effects. Real companies cut, raise and skip dividends.
How the calculation works
Month by month the share price grows at the price-growth rate and the dividend per share at the dividend-growth rate. The dividend is paid monthly at one twelfth of the annual amount, minus the tax you entered.
With reinvestment on, every dividend buys more units at the current price, so the number of units — and future dividends — grows; with it off, dividends pile up as cash. Yield on cost is the final year's income divided by everything you paid in.
A dividend is paid out of the company's value: the price drops by about the dividend on the ex-date. Judge income investments by total return, and remember that dividends can be cut — very high ones most often.
Questions and answers
Is a high dividend yield good?
Not by itself. A very high yield often means the market expects a cut or the payout exceeds earnings. Check dividend safety and the payment history on the instrument's dividend page before relying on the income.
What does DRIP mean?
Dividend reinvestment: dividends automatically buy more shares. It speeds up compounding, but in most countries the dividend is still taxed in the year it is paid.
How much capital do I need for a given income?
Divide the income you want by the yield after tax. At a 4 % yield and 15 % tax, 10,000 a year needs about 294,000. Enter a target income to see the figure.
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