How do I calculate dividend income?

Dividend income is calculated as: (Number of shares × Dividend per share) per payment period, or (Portfolio value × Dividend yield %) per year. Annual dividend = Investment × (Yield ÷ 100). For example, $10,000 at 4% yield = $400/year, or about $33/month. Use the calculator above with your investment amount and expected yield.

How much do I need to invest to make $1,000 per month in dividends?

At a 4% dividend yield, you need $300,000 invested to earn $1,000 per month ($12,000/year). At 5% yield, about $240,000. At 6%, about $200,000. Formula: (Target annual income) ÷ (Yield as decimal). So $12,000 ÷ 0.04 = $300,000. Use the calculator to test different yields and growth assumptions.

What is a good dividend yield?

A good dividend yield depends on your goals and risk. Broad-market dividend ETFs often yield 2–4%. Solid dividend stocks may yield 3–5%. High-yield names (6%+) can be riskier (dividend cuts, price drops). Many investors target 3–5% with a focus on dividend growth, not just current yield.

Is 8% dividend yield safe?

An 8% dividend yield is high and often comes with higher risk: the company may cut the dividend, or the stock price may fall. Sustainable yields for quality companies are often in the 3–6% range. Use 8% in the calculator as a high-yield scenario, but research the company’s payout ratio and history before investing.

DRIP (Dividend Reinvestment Plan) means automatically reinvesting your dividends to buy more shares instead of taking cash. Over time, you own more shares, so future dividends grow. The calculator’s “Reinvest dividends” option shows how DRIP increases your portfolio value and total shares over the years.

Yes. In the US, qualified dividends are taxed at long-term capital gains rates (0%, 15%, or 20% federal). Non-qualified (ordinary) dividends are taxed as ordinary income. The calculator’s optional tax rate lets you see after-tax dividend income and the impact on reinvestment.

Can you live off dividends?

Yes, if your portfolio is large enough. Using a 4% yield as a rough guide, you’d need about 25× your target annual income (e.g. $60,000/year → $1.5M). Many use a 3–4% withdrawal or yield target for retirement. Use the calculator to see how much you need for $1,000, $3,000, or $5,000 per month.

How many shares do I need to earn $500 per month?

Depends on dividend per share. If a stock pays $2 per share per year, you need $6,000/year ÷ $2 = 3,000 shares. At $50/share, that’s $150,000 invested. Alternatively: $6,000 ÷ 0.04 yield = $150,000. Use the calculator with “dividend per share” and “number of shares” or “investment amount” and “yield” to find the answer.

What is yield on cost?

Yield on cost is your current annual dividend income divided by your original investment (cost basis). If you invested $10,000 and now receive $500/year from that holding, your yield on cost is 5%. It rises as companies raise dividends, even if the current market yield is lower.

What is the difference between dividend yield and dividend rate?

Dividend yield is the annual dividend as a percentage of the current stock price (e.g. $2 dividend ÷ $50 price = 4% yield). Dividend rate usually means the annual dollar amount paid per share. Yield changes as the price changes; rate is the stated payout per share per year.

How does dividend growth affect long-term income?

When companies raise dividends each year, your income grows without adding new money. A 2% annual dividend growth rate compounds: after 20 years, the same investment can be paying much more per year. The calculator’s “Dividend growth rate” shows how growth and DRIP together increase income and portfolio value.

Should I reinvest dividends or take cash?

Reinvesting (DRIP) is usually better for long-term wealth: you buy more shares and benefit from compounding. Taking cash makes sense if you need the income (e.g. in retirement) or want to diversify into other investments. Use the calculator to compare “Reinvest” vs no reinvestment over 10–20 years.

2026 · Free

Dividend Calculator (Estimate Your Monthly & Annual Dividend Income)

Use this dividend income calculator to estimate monthly and annual dividend payouts, with optional dividend reinvestment (DRIP), growth rate, and tax. See how much you need to invest to reach a target income.

Pair with our Investment Calculator, 401k Calculator, Net Worth Calculator, and Paycheck Calculator to plan your full financial picture.

Investment & dividend yield

Enter your investment amount and expected dividend yield. Use presets or a custom yield.

Investment amount ($)

Dividend yield (%)

Stock price (optional)

Dividend per share (optional)

Number of shares (optional)

Growth & term

Dividend growth rate and number of years. Enable reinvestment (DRIP) and optional tax.

Dividend growth rate (% per year)

Years

Reinvest dividends (DRIP)

Tax on dividends

Results

Year-one dividend income and portfolio with DRIP over 20 years

Annual dividend income (year 1)

$400

$33/month · $100/quarter

Total dividends (20 yr)

$15,825

Yield on cost (end)

14.22%

Ending portfolio

$25,825

Portfolio value & dividends over time

Portfolio grows as dividends are reinvested.

Year-by-year breakdown

Annual dividend, cumulative total, yield on cost, and portfolio value

Year	Annual dividend	Monthly	Cumulative	Yield on cost	Portfolio value
1	$400	$33	$400	4%	$10,400
2	$424	$35	$824	4.24%	$10,824
3	$450	$38	$1,275	4.5%	$11,275
4	$479	$40	$1,753	4.79%	$11,753
5	$509	$42	$2,262	5.09%	$12,262
6	$542	$45	$2,804	5.42%	$12,804
7	$577	$48	$3,381	5.77%	$13,381
8	$615	$51	$3,995	6.15%	$13,995
9	$656	$55	$4,651	6.56%	$14,651
10	$700	$58	$5,352	7%	$15,352
11	$749	$62	$6,100	7.49%	$16,100
12	$801	$67	$6,901	8.01%	$16,901
13	$857	$71	$7,758	8.57%	$17,758
14	$919	$77	$8,677	9.19%	$18,677
15	$986	$82	$9,663	9.86%	$19,663
16	$1,059	$88	$10,722	10.59%	$20,722
17	$1,138	$95	$11,859	11.38%	$21,859
18	$1,224	$102	$13,084	12.24%	$23,084
19	$1,319	$110	$14,403	13.19%	$24,403
20	$1,422	$119	$15,825	14.22%	$25,825

What is a dividend?

A dividend is a portion of a company’s earnings paid to shareholders, usually in cash, on a regular schedule (quarterly in the US). Dividend yield is the annual dividend per share divided by the current stock price, expressed as a percentage. For example, a $50 stock that pays $2 per share per year has a 4% yield. Dividend per share is the dollar amount paid per share; yield puts that in context relative to price. Companies that pay dividends are often mature, profitable firms that return excess cash to owners. Not all stocks pay dividends; growth companies may reinvest profits instead.

How to calculate dividend income

The basic formula for dividend income is: Annual dividend = Investment amount × (Dividend yield ÷ 100). Example: $10,000 at 4% yield = $400 per year, or about $33/month and $100/quarter. Example: $100,000 at 5% yield = $5,000 per year, or about $417/month. To find how many shares you need to earn $1,000 per month: you need $12,000 per year. At 4% yield, that’s $12,000 ÷ 0.04 = $300,000 invested. At 5%, $240,000. Use the calculator above to plug in your numbers and see monthly, quarterly, and annual income plus a year-by-year breakdown.

Dividend reinvestment (DRIP)

Dividend reinvestment, or DRIP, means using your dividend payments to buy more shares instead of taking cash. Over time, you own more shares, so each subsequent dividend is larger. Combined with dividend growth (companies raising payouts), the effect compounds. Example: $50,000 invested at 4% yield with 2% annual dividend growth and full reinvestment. After 20 years, the portfolio value and annual income are much higher than if you had taken the dividends in cash. The calculator’s “Reinvest dividends” toggle shows ending portfolio value and total shares when DRIP is on—a dividend reinvestment calculator and DRIP calculator in one.

How much do you need to live off dividends?

A common rule of thumb is the 4% rule: you can withdraw about 4% of your portfolio per year in retirement. For dividend income, a 4% yield means you need a portfolio equal to 25× your target annual income. So for $1,000 per month ($12,000/year), you’d need about $300,000 at 4% yield. For $3,000 per month ($36,000/year), about $900,000. For $5,000 per month ($60,000/year), about $1.5 million. Use a slightly lower yield (e.g. 3.5%) to be conservative, which increases the required portfolio size. The calculator lets you set a target and see how different yields and growth rates change the picture.

Dividend growth investing

Dividend growth investing focuses on companies that raise their dividends regularly. Even a modest dividend growth rate (e.g. 2–5% per year) compounds: your yield on cost (dividend ÷ original investment) rises over time, and if you reinvest, your share count and income grow faster. The calculator’s “Dividend growth rate” field shows how growth affects annual income and ending portfolio value. A dividend growth calculator like this one helps you compare “high yield today” vs “lower yield but growing” strategies.

Dividend taxes explained (US)

In the US, qualified dividends are taxed at long-term capital gains rates (0%, 15%, or 20% federal, depending on income). Ordinary (non-qualified) dividends are taxed as ordinary income at your marginal rate. Qualified status generally requires holding the stock for more than 60 days during the 121-day period before the ex-dividend date. The calculator’s optional tax rate on dividends lets you enter an effective rate (e.g. 15%) to see after-tax dividend income and the impact on reinvestment. For exact numbers, use our capital gains tax calculator or after-tax stock calculator.

Dividend yield vs total return

Dividend yield alone can be misleading: a high yield can mean a struggling company (price fell) or an unsustainable payout. Total return = price change + dividends. A stock with a 2% yield that appreciates 8% delivers 10% total return; a stock with an 8% yield that falls 5% delivers 3% total return. For long-term wealth, many investors combine dividend income with growth (dividend growers or broad index funds). Use this tool to plan income and yield on cost; use our investment calculator to model total return with growth and contributions.

Frequently asked questions

Next steps: build wealth and income

Use these tools to see how much to invest, how salary maps to savings, and how retirement accounts grow. Then come back to this dividend calculator to plan passive income.