How to use this calculator
- Initial investment and Added each year: your starting amount and what you’ll add at the end of each year.
- Dividend yield: the annual dividend divided by the share price today. For a fund, use its trailing or SEC yield.
- Dividend growth per year: how fast the dividend per share rises.
- Share price growth per year: how fast the price rises. Keep it close to the dividend growth rate for a realistic long-run picture.
- Years and DRIP: how long to project, and whether dividends buy more shares or come to you as cash.
- Open Taxes to see federal tax on qualified dividends at 2026 rates, based on your filing status and other taxable income.
How the projection works
Each year the calculator:
- Pays the dividend on the shares you held during the year: shares × dividend per share.
- Grows the share price by the price growth rate.
- With DRIP on, uses the dividend (after tax, if you turned taxes on) to buy shares at the new price.
- Invests your yearly addition at that price.
- Raises the dividend per share by the dividend growth rate.
Without new money or reinvestment, the dividend in year n is simply the first-year dividend × (1 + dividend growth)^(n − 1).
Worked example
You invest $25,000 and add $6,000 a year for 20 years. The portfolio yields 3% today, dividends grow 6% a year and share prices grow 5% a year.
- Year 1 pays $750 (3% of $25,000).
- With DRIP, year-20 income reaches $13,333, or about $1,111 a month. You put in $145,000 in total, and the portfolio is worth $409,068, including $106,962 of reinvested dividends.
- Your yield on cost in year 20 is 9.6%, because the dividends on your original money have grown.
- Taking cash instead, year-20 income is $8,851 and the portfolio is worth $264,728. You collect $81,115 in dividends along the way.
Turn on taxes as a single filer with $60,000 of other taxable income, and every dividend in this example falls in the 15% bracket. With the tax paid out of each dividend, year-20 income is $12,524 and the tax on it is $1,879.
Dividend growth makes the biggest difference
Income from $100,000 at a 3% starting yield, with share prices rising 5% a year:
| Dividend growth | Year 10, DRIP | Year 20, DRIP | Year 20, cash |
|---|---|---|---|
| 0% | $3,704 | $4,295 | $3,000 |
| 3% | $4,953 | $8,280 | $5,261 |
| 6% | $6,595 | $16,259 | $9,077 |
With flat dividends, reinvesting is the only source of income growth, and it slows as the price rises faster than the dividend. With 6% dividend growth, year-20 income with reinvesting is more than five times the starting $3,000.
2026 tax on qualified dividends
Qualified dividends stack on top of your other taxable income. The rate depends on where they land:
| Filing status | 0% up to | 15% up to | 20% above |
|---|---|---|---|
| Single | $49,450 | $545,500 | $545,500 |
| Married filing jointly | $98,900 | $613,700 | $613,700 |
| Head of household | $66,200 | $579,600 | $579,600 |
| Married filing separately | $49,450 | $306,850 | $306,850 |
For example, a single filer with $40,000 of other taxable income and $20,000 of qualified dividends pays 0% on the first $9,450 of dividends and 15% on the remaining $10,550, or $1,582.50.
To be qualified, a dividend generally has to come from a US company or a qualifying foreign one, and you must hold the shares for more than 60 days during the 121-day period that starts 60 days before the ex-dividend date. Higher earners may also owe the 3.8% net investment income tax once modified AGI passes $200,000 (single) or $250,000 (married filing jointly). Holding dividend stocks in a Roth IRA avoids these taxes; see the Roth IRA calculator.
Tips for dividend investors
- Don’t chase the highest yield. A very high yield often means the market expects a dividend cut.
- Diversify. A dividend from one company can be cut overnight. Funds spread that risk.
- Reinvest while you’re building, take cash when you need it. Many investors run a DRIP for decades, then switch it off in retirement.
- Remember total return. Price growth plus dividends is what builds wealth; the investment calculator projects total return directly.
Assumptions and limitations
The model works in whole years: dividends are paid and reinvested once a year at year-end, while most stocks pay quarterly, so real reinvestment compounds slightly faster. Growth rates are constant, which real markets never are. Taxes use the 2026 brackets for every year, ignore state tax and the net investment income tax, and assume all dividends are qualified. If dividends grow faster than prices for many years, the projected yield keeps rising, which rarely happens in practice. For selling shares, see the capital gains tax calculator.
Sources
- IRS: Rev. Proc. 2025-32, 2026 inflation adjustments, section 4.03 maximum capital gains rate amounts
- IRS: Publication 550, Investment Income and Expenses (qualified dividend holding period)
- IRS: Topic no. 404, Dividends
- IRS: Topic no. 409, Capital gains and losses
- IRS: Net investment income tax
This calculator is for education only and isn’t investment or tax advice. Dividends are never guaranteed.
Frequently asked questions
What is yield on cost?
Yield on cost is this year's dividend income divided by the money you originally invested. If you invested $25,000 and it now pays $2,500 a year, your yield on cost is 10%, even if the stock's current yield is only 3%. It shows how dividend growth has raised the income on your original money.
Does a DRIP really make a big difference?
Over long periods, yes. In this calculator's default example, reinvesting adds about $4,482 a year to the year-20 income, roughly 51% more than taking cash. Each reinvested dividend buys shares that pay their own dividends, so the income compounds.
How are dividends taxed in 2026?
Qualified dividends are taxed at 0%, 15% or 20%, depending on your taxable income. For 2026 the 0% rate applies up to $49,450 of taxable income for single filers and $98,900 for married couples filing jointly, and 20% starts above $545,500 and $613,700. Nonqualified dividends are taxed as ordinary income.
Are reinvested dividends taxed?
Yes. Dividends in a taxable account are taxable in the year they are paid, even if a DRIP reinvests them right away. Keep records, because each reinvested dividend adds to your cost basis and lowers the capital gains tax when you eventually sell.
What is a good dividend growth rate?
There's no guarantee of any growth rate, and companies can cut dividends. Rather than relying on one number, try several. A portfolio whose dividend grows faster than its share price will see its yield rise year after year, which usually doesn't last for decades.
How much do I need to invest to earn $1,000 a month in dividends?
At a 3% yield you'd need about $400,000 to generate $12,000 a year; at 4%, about $300,000. Dividend growth and reinvestment reduce what you need to put in yourself if you start years ahead.
Updated November 2026. Results are estimates for educational purposes and depend on the inputs you provide.