Dividend income calculator
Enter the number of shares, the price you paid and the annual dividend per share to see the income it produces and the capital needed to reach a monthly target.
Before tax. Dividends are not guaranteed and share prices change. Not investment advice.
How this calculator works
Dividend income is the annual dividend per share multiplied by the number of shares you own. The yield on cost — annual income divided by what you paid — is the number that matters once you own the shares; the current yield uses today's price and moves every day.
The capital-needed figure answers the retirement question: at this yield, how much would you have to invest to produce a given monthly income? It ignores dividend growth, taxes and price changes.
The formula
annual income = shares × dividend per share
monthly income = annual income ÷ 12
yield on cost = annual income ÷ amount invested × 100
capital needed = target monthly income × 12 ÷ yield500 shares at $40 paying $2.40 a year produce $1,200 a year ($100 a month) on $20,000 invested — a 6% yield on cost. Producing $500 a month at that yield needs $100,000.
Worked example
Your $20,000 investment pays $1,200.00 a year, or $100.00 a month. To reach your monthly target at this yield you would need $100,000 invested.
Common mistakes
- Assuming the dividend is fixed. Companies cut dividends in recessions; a high yield can signal a payout about to fall.
- Ignoring tax. US qualified dividends are taxed at capital-gains rates, but REIT and foreign dividends are often taxed as ordinary income.
- Chasing yield. A 9% yield with a falling share price can lose more than the dividend pays.
Frequently asked questions
Is dividend income guaranteed?
No. Dividends are declared by the company and can be reduced or stopped. Diversifying across many payers reduces the risk of one cut.
What is a good dividend yield?
Broad-market funds typically yield 1-2%; individual high-yield stocks 4-6% but with more risk. Compare a stock's yield with its sector rather than in isolation.
Does the calculator account for dividend growth?
No. It uses the dividend you enter as a constant. Growing dividends increase the effective yield over time, which the simple calculation ignores.
Related calculators
Compound Interest Calculator401(k) Growth CalculatorStock Profit Calculator · All Investing calculators