Dividend Calculator

Companies quote dividends per share, usually per quarterly payment, which makes it hard to see what a holding actually pays you. This calculator multiplies it out: annual, monthly and per-payment income for your share count, the current yield at today's price, the yield on what you paid, the payout ratio if you enter earnings per share, and the income left after tax.

The second mode works backward from a goal. Enter the monthly income you want, the yield you expect and your tax rate, and it returns the portfolio size and share count needed. The projection keeps your share count fixed and grows the dividend at a rate you choose, so it shows income growth from dividend raises alone. If you plan to reinvest dividends into more shares, use the DRIP calculator, which models the growing share count.

Annual income = shares × dividend per payment × payments per year

Current yield = annual dividend per share ÷ current price

Yield on cost = annual dividend per share ÷ your cost per share

Payout ratio = annual dividend per share ÷ earnings per share

Investment needed = (monthly target × 12 ÷ (1 − tax rate)) ÷ yield

Current yield tells you what a new buyer earns at today's price; yield on cost tells you what your original money earns now. They are the same on the day you buy and drift apart as the price and dividend move. The payout ratio shows how much of the company's profit goes out as dividends. Above 100%, the company is paying more than it earns, which cannot last without borrowing or drawing down cash. Monthly income is the annual figure divided by 12, an average: a quarterly payer actually pays you four lump sums.

300 shares, $0.60 a quarter

300 × $0.60 × 4 = $720.00 a year, or $180.00 each quarter. At a $60 price the yield is 4%; bought at $45, the yield on cost is 5.33%. With earnings of $3.20 a share the payout ratio is 75%. At a 15% tax rate you keep $612.00. If the dividend rose 6% a year, year 10 would pay $1,216.42 and the yield on cost would reach 9.01%, all without buying another share.

A monthly payer

1,000 shares paying $0.08 a month bring in $80.00 every month, $960.00 a year. At a 22% tax rate that is $62.40 a month after tax, and at a $14 price the yield is 6.86%.

$2,000 a month after tax

At a 3.5% yield and a 15% tax rate, you need $28,235 a year before tax (24,000 ÷ 0.85), so the portfolio must be about $806,723, or 16,134 shares at $50.

Before tax, by the average yield of the holdings. The yields are examples to compare against, not forecasts.

How yield on cost grows from a 2.5% starting yield

The IRS splits dividends into two kinds. Qualified dividends are taxed at the long-term capital gains rates of 0%, 15% or 20%, depending on taxable income; ordinary dividends are taxed at your regular income tax rate. To count as qualified, the dividend must come from a US corporation or a qualifying foreign one, and you must have held the shares for more than 60 days during the 121-day period that begins 60 days before the ex-dividend date. Most REIT distributions are ordinary dividends.

Higher earners may also owe the 3.8% net investment income tax when modified adjusted gross income exceeds $200,000 (single) or $250,000 (married filing jointly). The income brackets for each rate are adjusted every year, so look up the current year's figures in IRS Topic No. 404 and the Form 1040 instructions, then enter your combined rate in the tax field. Dividends inside an IRA, 401(k) or similar account are not taxed when paid, so enter 0 for those.

• Dividends can be cut. The board sets each payment. Past dividends and an assumed growth rate say nothing certain about future ones.
• Trailing versus forward yield. Data sites quote yield from the last 12 months of payments or from the latest payment annualized. Special one-off dividends can inflate the trailing figure.
• Price changes are ignored. Income figures do not include any gain or loss on the shares themselves.
• Foreign withholding. Dividends from non-US companies may have tax withheld abroad before they reach you.