Dividend Calculator: Returns on Reinvested Dividends
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Dividend stocks are popular among investors for a reason. In addition to potentially rising in price, they provide income in the form of regular dividend payments. If those dividends are reinvested in the stock, they can compound your returns.
One small downside of this kind of investing is the complexity of the math behind it. To calculate your total return on a dividend stock investment you’ll need to account for stock price growth, dividend yield, dividend frequency, holding period and more.
Our dividend calculator can make this easier. Just fill out the fields below for an estimate of your total returns from a dividend stock investment.
» See our list of the best brokers for dividend investing.
Frequently asked questions
What is dividend yield?
Dividend yield is the annual percent return on an investment from dividend payments. For a stock or dividend ETF, dividend yield is equal to the sum of the last twelve months of dividend payments per share, divided by the current share price. Forward dividend yield is equal to the sum of the next twelve months of projected dividend payments per share, divided by the current share price.
Since a stock or fund's dividend yield depends on its current share price, it often bobs around throughout the trading day. You can often find a stock's average dividend yield over the last five years, or some other timeframe, on a financial statistics site such as Yahoo Finance.
Is a high dividend yield a good thing?
Stocks and funds with very high dividend yields may boost your returns, but they may not be able to sustain those high yields indefinitely. If a stock is paying out more in dividends per share than it brings in in earnings per share (EPS), it will eventually have to cut its dividend or borrow money to cover it.
Investors may want to consider dividend stability along with yield when shopping for dividend stocks. The Dividend Aristocrats, for example, are a group of S&P 500 stocks that have increased their dividend payouts every year for the last 25 years or more.