How the dividend calculator works
Dividends in a year = value of your shares × dividend yield
Each year the dividend per share grows by the dividend growth rate, and the share price by the price growth rate. If you reinvest, that year’s dividends buy more shares at the year’s price, so next year you’re paid on more shares.
Example
10,000 at a 4% yield pays 400 in the first year. With 5% dividend growth and 3% price growth, reinvested for 10 years, the dividends grow to about 900 a year.
Yield on cost
The calculator also shows your yield on cost: the last year’s dividends as a share of all the money you put in. It shows how much a growing dividend can pay on your original investment.
