Dividend Calculator

Dividend yield is the annual dividend payment expressed as a percentage of the stock's current price. If a stock trades at $100 and pays $3 in annual dividends, its dividend yield is 3%.

Dividend yield varies significantly across sectors. Utilities and REITs typically offer yields of 3-6%, while technology companies often pay little or no dividend. The average S&P 500 dividend yield has historically been around 2-3%.

A high yield can be attractive but may also signal risk. If a stock's price drops significantly while the dividend stays the same, the yield rises. Always investigate why a yield is unusually high before investing.

Dividend reinvestment (DRIP) is the strategy of using dividend payments to buy additional shares of the same stock. This creates a compounding effect where each new share earns its own dividends, which buy more shares, and so on.

Consider a $10,000 investment with a 3% yield and 5% annual dividend growth. Without reinvestment, you receive about $3,979 in total dividends over 10 years. With reinvestment, the total rises to about $4,365, and your portfolio is worth $14,365 instead of $10,000.

Over 20-30 years, the difference becomes dramatic. DRIP is most effective with companies that consistently grow their dividends, known as Dividend Aristocrats (25+ years of consecutive increases) and Dividend Kings (50+ years).

Yield on cost (YOC) measures your current dividend income relative to your original purchase price, not the current stock price. It shows how your income stream has grown since you first invested.

For example, if you bought a stock at $50 paying a $1.50 dividend (3% yield) and the dividend has grown to $3.00, your yield on cost is 6%, even though the current market yield might be different.

YOC is a useful metric for long-term dividend investors to track the growing income stream from their original investment. Investors who bought quality dividend stocks 10-20 years ago often enjoy yield on cost figures of 8-15% or more.