Dividend Calculator

2-4% is typical for quality dividend stocks. Over 5% may indicate risk (the price dropped, inflating the yield — investigate why). Under 2% but growing fast can be better than 5% with no growth. Focus on dividend growth rate and payout ratio as much as current yield.

DRIP = Dividend Reinvestment Plan. Instead of receiving cash, dividends automatically buy more shares. Over decades, this compounding accelerates wealth dramatically. A $10,000 investment with 3% yield, 5% dividend growth, and DRIP over 30 years generates far more than taking dividends as cash.

Payout ratio = Dividends paid / Net income. Under 50%: sustainable, room to grow. 50-75%: moderate, still usually safe. Over 75-80%: may be unsustainable. Over 100%: the company is paying more than it earns — dividend cut likely. Always check payout ratio before buying dividend stocks.

Yield on cost (YOC) = Current annual dividend / Original purchase price. If you bought a stock at $20/share and it now pays $2/year, your YOC is 10% even if current yield is only 3%. Long-term dividend growth investing is powerful because YOC compounds over time.

Individual dividend stocks: reits, utilities, consumer staples, financials with long dividend history. Dividend ETFs: VYM (Vanguard High Dividend), SCHD (Schwab Dividend), NOBL (Dividend Aristocrats). REITs offer high yields but pay as ordinary income. Dividend growth > high current yield for long-term investors.