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A 3% dividend yield sounds boring. A 3% yield with 7% annual growth turns $1,500/year into $5,900/year in 20 years — without buying a single additional share. Dividend growth rate is the overlooked variable that separates "nice side income" from "I can retire on this."
The Dividend Calculator includes a growth rate input. Enter a percentage (5% is a good starting point for quality stocks) and set the number of years. The tool shows you how your annual income increases over time.
See how growth compounds your dividends.
Project Growth →Starting dividend: $2.00 per share. Different growth rates over 10, 20, and 30 years:
| Growth Rate | Year 1 | Year 10 | Year 20 | Year 30 |
|---|---|---|---|---|
| 0% (no growth) | $2.00 | $2.00 | $2.00 | $2.00 |
| 3% | $2.00 | $2.69 | $3.61 | $4.85 |
| 5% | $2.00 | $3.26 | $5.31 | $8.64 |
| 7% | $2.00 | $3.93 | $7.74 | $15.22 |
| 10% | $2.00 | $5.19 | $13.46 | $34.90 |
At 7% growth, a $2 dividend becomes $15.22 in 30 years. If you own 200 shares, your annual income goes from $400 to $3,044 — without adding any money. With DRIP (reinvesting dividends to buy more shares), the numbers grow even faster.
| Category | Typical Growth Rate | Starting Yield | Example |
|---|---|---|---|
| High growth, low yield | 8-15% | 0.5-2% | Apple, Microsoft, Visa |
| Moderate growth, moderate yield | 5-8% | 2-4% | Johnson & Johnson, PepsiCo, Lowes |
| Low growth, high yield | 0-3% | 4-7% | AT&T, utilities, most REITs |
| Dividend Aristocrats average | ~7% | ~2.5% | 25+ years of consecutive increases |
| Dividend Kings average | ~5% | ~3% | 50+ years of consecutive increases |
The sweet spot for most investors is moderate growth + moderate yield. You get meaningful current income that grows at a pace that outpaces inflation.
Yield on cost is your current dividend divided by what you originally paid for the stock. If you bought a stock at $40 with a $1.60 dividend (4% yield), and the dividend grows to $4.00 over 20 years, your yield on cost is $4.00 / $40 = 10%.
You're earning 10% annually on your original investment, even though the stock's current yield (based on today's price) might be 3%. This is why long-term holders of dividend growth stocks end up with incredible income relative to their cost basis.
Project your dividend growth trajectory.
Calculate Growth →