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Calculate dividend income, yield, and DRIP growth projections over time.
A dividend is a distribution of a company's profits to shareholders, typically paid quarterly. Dividend yield = (Annual Dividend Per Share ÷ Stock Price) × 100. DRIPs automatically reinvest dividends to compound share growth over time.
Annual Dividend Income
DRIP Projection (Year 10)
With 3% annual dividend growth, DRIP reinvestment
| Yield | 5 Years | 10 Years | 20 Years |
|---|---|---|---|
| 2% | $11,040 | $13,440 | $21,911 |
| 3% | $11,593 | $15,477 | $28,139 |
| 4% | $12,167 | $17,756 | $36,074 |
| 5% | $12,763 | $20,305 | $46,159 |
| 6% | $13,382 | $23,141 | $58,902 |
Formula
Annual Income = Shares × Annual Dividend Per Share | Dividend Yield = (Annual Dividend Per Share ÷ Stock Price) × 100Shares = Number of shares of stock owned
Annual Dividend Per Share = Total dividends paid per share over one year
Stock Price = Current market price per share
Worked Example
500 shares at $2.40/year dividend, $40 stock price
Did you know? Qualified dividends from US corporations are taxed at long-term capital gains rates (0%, 15%, or 20%), significantly lower than the ordinary income rates that apply to unqualified dividends. To qualify, shares must be held for at least 61 days during the 121-day period surrounding the ex-dividend date (source: IRS Publication 550).
Sources
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