What is a dividend yield?

Dividend yield = annual dividend per share / stock price × 100. A stock paying $3/year trading at $60 has a 5% yield. Yield changes as the stock price moves.

What is DRIP investing?

DRIP (Dividend Reinvestment Plan) automatically reinvests dividends to buy more shares. Over time, this creates compounding growth — you earn dividends on dividends, which can dramatically accelerate portfolio growth over 10-20+ years.

Qualified dividends in the US are taxed at 0%, 15%, or 20% depending on income. Ordinary dividends are taxed as ordinary income. In a Roth IRA or 401(k), dividends grow tax-free.

How large a portfolio do I need for $5,000/month in dividends?

At a 4% dividend yield, you need a $1.5 million portfolio for $5,000/month ($60,000/year). At 5% yield you need $1.2M; at 6% yield you need $1.0M.

Dividend Calculator 2026 — Income, DRIP Growth & Yield

Q: What is a good dividend yield?

A yield of 2–6% is generally considered healthy. Below 1% offers little income. Above 8% may signal financial trouble. Dividend Aristocrats (25+ years of increases) typically yield 2–5%.

Annual Dividends

$20,000

4% yield · $500K portfolio

Monthly Income

$1,667

before tax

After-Tax Annual

$15,600

after 22% tax

📊 Income

♻️ DRIP Growth

🎯 Target

Quick-Pick Dividend Aristocrats

3.4%

Coca-Cola

JNJ

3.1%

J&J

2.4%

P&G

5.4%

Realty Income

MMM

5.8%

MSFT

0.8%

Microsoft

Portfolio Inputs

Portfolio Value

Dividend Yield (%)

Dividend Per Share (optional)

Overrides yield if entered with price

Stock Price (for DPS)

Tax Rate & Yield Health

Tax Rate (%)

Qualified: 0/15/20% · Ordinary: income rate

Yield HealthHealthy (4%)

Low (<1%)Healthy (2–6%)High Risk (7%+)

Income Breakdown

Annual

$20,000

Monthly

$1,667

Quarterly

$5,000

Daily

$54.79

Tax Paid

—

annual tax

After-Tax Annual

—

net income/yr

After-Tax Monthly

—

take-home/mo

After-Tax Yield

—

effective yield

DRIP Reinvestment Inputs

Starting Portfolio ($)

Dividend Yield (%)

Annual Growth (%)

Monthly Extra ($)

Years

DRIP Growth Projection

Final Portfolio Value

—

after reinvestment

Final Annual Income

—

per year at period end

Total Invested

—

Total Dividends

—

Capital Growth

—

Total Return

—

Year	Portfolio	Ann. Dividends	Yield	Cumulative Divs

Target Income Inputs

Monthly Income Goal

Expected Yield (%)

Portfolio Size Needed

Portfolio Required (at 4% yield)

$1,500,000

to generate $5,000/month in dividends

Yield	Portfolio Needed	Annual Income

Dividend Calculator — How to Build Passive Income from Stocks

Dividend investing is one of the most reliable ways to build long-term wealth. Unlike growth stocks that depend on price appreciation, dividend stocks pay you regularly — monthly, quarterly, or annually — simply for owning shares. This calculator shows your dividend income today, how DRIP (dividend reinvestment) compounds your wealth over time, and exactly how large a portfolio you need to hit a target monthly income.

What Is Dividend Yield and How Is It Calculated?

Dividend yield = (Annual dividend per share ÷ Current stock price) × 100. If a stock pays $2.40/year in dividends and trades at $60, its yield is 4%. Yield changes as the stock price moves — a falling price makes yield look higher, which is why very high yields (above 8–10%) can signal a dividend cut risk. For dividend income investing, look for yields in the 3–6% range from companies with 5+ years of consecutive dividend growth.

The Power of DRIP — Dividend Reinvestment

DRIP (Dividend Reinvestment Plan) automatically uses your dividend payouts to buy more shares instead of sending you cash. This creates a compounding effect: more shares → more dividends → even more shares. On a $50,000 portfolio at 4% yield with 5% annual growth and $500/month additional contributions, DRIP produces a final portfolio value roughly 35–40% larger than taking dividends as cash over 20 years.

How Much Do You Need to Retire on Dividends?

To generate a specific monthly income entirely from dividends, divide your monthly goal by your expected yield. For $5,000/month at 4% yield: ($5,000 × 12) ÷ 0.04 = $1,500,000 portfolio required. At 5% yield you'd need $1,200,000. The Target Income tab calculates this across multiple yield scenarios so you can see how yield choices dramatically change the portfolio size needed.

Reinvest dividends early: DRIP has the biggest impact in the first decade — don't take cash until you need the income
Watch the payout ratio: A healthy dividend has a payout ratio under 60–70%. Above 80% may signal the dividend is at risk of being cut
Diversify across sectors: REITs, utilities, consumer staples, and financials are top dividend-paying sectors — spread across at least 3
Use a Roth IRA for dividend stocks: Dividends in a Roth grow and are withdrawn tax-free — especially powerful for high-yield positions held long-term

What is a good dividend yield?+

A good dividend yield is typically 3–5% for most income investors. Below 2% offers little income; above 7–8% is a warning sign that the dividend may be unsustainable. Look for companies with 5+ years of consecutive dividend growth as a sign of reliability.

How does DRIP work?+

A DRIP (Dividend Reinvestment Plan) automatically reinvests dividend payouts to purchase additional shares of the same stock. This compounds your growth significantly — your new shares earn their own dividends, which buy even more shares. Most brokerages offer DRIP at no cost for eligible stocks.

Are dividends taxed?+

Qualified dividends (from U.S. corporations held 60+ days) are taxed at long-term capital gains rates: 0%, 15%, or 20% depending on income. Ordinary dividends are taxed as regular income. Dividends inside a Roth IRA or 401(k) are sheltered from current-year taxation.

What is the difference between dividend yield and dividend growth?+

Dividend yield is what you earn today relative to the stock price. Dividend growth is how much the payout increases each year. A stock at 2% yield growing dividends 10%/year can outperform a 5% yield stock with flat dividends over a 15–20 year horizon.