You enter an initial investment, dividend yield, growth rate, and time horizon. The tool computes year-one dividends as investment × yield, then projects forward year by year, increasing the dividend by the growth rate and optionally reinvesting (DRIP). It does not account for share price changes, taxes, or fees — the ending value reflects reinvested dividends only.
As of recent years, the S&P 500 average yield is roughly 1.3–1.7%. High-dividend stocks and REITs may yield 3–6%, while some specialty funds exceed 8% — but very high yields often signal elevated risk or unsustainable payouts.
DRIP stands for Dividend Reinvestment Plan. Instead of receiving cash, your dividends automatically buy more shares. Over time this creates a compounding effect — your reinvested shares earn their own dividends, accelerating growth significantly.
Yes. In a taxable brokerage account, reinvested dividends are still taxable income in the year received. Tax-advantaged accounts like IRAs or 401(k)s let dividends compound tax-deferred or tax-free (Roth). Consult a tax professional for your situation.
Absolutely. Companies can reduce or suspend dividends at any time, especially during economic downturns. Dividend history, payout ratio, and earnings stability are key factors to evaluate before relying on projected income.
No. It models dividend income and DRIP reinvestment only. Real total return also includes capital appreciation (or depreciation) of the underlying shares, which this tool does not project.
Estimate only. Results reflect your inputs and standard formulas. Double-check important decisions independently.