Dividend Calculator

How to use this calculator

1. 1Enter the amount investedType your starting lump sum, and optionally an amount you plan to add each year.
2. 2Set the starting dividend yieldEnter the current dividend yield of the stock or fund, as a percentage (the UK market average is around 3–4%).
3. 3Add growth assumptionsSet how fast you expect the dividend per share and the share price to grow each year. Be conservative — long-run dividend growth of 3–6% is realistic for established payers.
4. 4Choose your time horizonDrag the slider to the number of years you plan to hold. Dividend compounding rewards patience — the effect accelerates over decades.
5. 5Toggle reinvestment (DRIP)Switch reinvestment on to buy more shares with each dividend, or off to take the income as cash. The calculator shows both so you can see the difference.

What this dividend calculator shows

A simple dividend yield calculator answers "what income does this pay today?". This one answers the bigger question: "what could this income grow into?" It models three forces at once — the growth in the dividend per share, the growth in the share price, and the compounding effect of reinvesting each payout into more shares.

The result is an estimate of your future annual income, your total dividends received, your yield on cost (income measured against what you originally paid), and the portfolio value at the end of your chosen horizon.

The power of reinvesting (DRIP)

A dividend reinvestment plan (DRIP) uses each dividend to buy more shares automatically. Those new shares pay dividends too, which buy more shares again — a compounding loop that, over 20–30 years, often contributes more to total return than the share-price gain itself.

Toggle reinvestment on and off in the calculator to see the gap. The longer your horizon and the higher the yield, the larger the "extra from reinvesting" figure becomes.

Yield on cost — why it grows

Yield on cost is your annual dividend divided by what you originally paid, not the current price. As a company raises its dividend year after year, your yield on cost climbs even though the headline yield for new buyers stays roughly the same. A stock bought at a 4% yield that grows its dividend 6% a year can be yielding over 12% on your original cost within 20 years.

Important assumptions and limits

Real dividends are never this smooth. Companies cut, freeze, or grow payouts depending on profits and the economy, and share prices move in ways no straight-line model captures.

• Constant rates are unrealistic — use the projection as a rough guide, not a forecast. Try a lower growth rate to stress-test it.
• Dividends aren't guaranteed — always check dividend cover to see whether the payout is affordable.
• Tax matters outside an ISA — dividends are taxed in a general account. Held in a stocks and shares ISA, they're tax-free.

Frequently asked questions