Dividend growth rate and yield on cost calculator
A dividend that grows can turn a small yield into a big one on the price you paid. See how fast yours has grown, and what that rate would mean if it kept going.
| Year from now | Dividend per share | Yield on your cost |
|---|
How it works: the dividend growth rate is the steady yearly rate that turns the old dividend into today's: (dividend now ÷ dividend then) to the power of (1 ÷ years), minus 1. That is a CAGR, a compound annual growth rate. Yield on cost = today's yearly dividend ÷ the price you paid. The table grows today's dividend at that same rate for the years you choose and divides by your price again. Real dividends don't grow in a straight line: they get frozen, cut, and sometimes jump. Taxes are left out.
Yield on cost feels great. Read it with care.
Yield on cost tells you what your old purchase pays you now. It doesn't tell you what the same money would earn today. Say you bought at $40 and the dividend is now $1.50 (hypothetical). Your yield on cost is 3.75%. If the stock now trades at $75, a new buyer gets 2%, and so would you if you sold and bought it back. Fill in today's price to see both numbers side by side. The gap between them is the part of your return that came from the price going up, not from the dividend. More on this in yield on cost and dividend yield.
Past growth is not a promise
A 10% growth rate over five years can come from one big raise and four tiny ones. Growth that beats earnings growth for long eats into the payout ratio until it can't. Check that the money behind the dividend grew too. For where dividend growth fits next to high yield, taxes and covered calls, start with dividend investing explained.
Follow along