What This Dividend Calculator Shows

A dividend is the part of a company's profit that it pays out to its shareholders, usually once or a few times a year. This calculator shows how much income an investment in dividend-paying shares can produce, and how that income grows over time. You can choose whether the dividends are paid out to you or reinvested in more shares, add a regular monthly investment, and allow for tax.

How the Calculation Works

Each year, the calculator multiplies the portfolio value by the dividend yield to get that year's dividends, and deducts tax at the rate you enter. The share prices and the dividends are assumed to grow at the same annual dividend growth rate, so the yield stays constant. If you tick Reinvest dividends, the after-tax dividends buy more shares, which then pay dividends of their own. Your monthly additions are added once a year. The table shows the dividends paid and the portfolio value year by year.

Worked Example

You invest €10,000 in shares with a 4% dividend yield, the dividends grow by 3% a year, and you keep the investment for 20 years without adding more money.

	Dividends paid out	Dividends reinvested
Dividends in year 1	€400	€400
Dividends in year 20	€701	€1,447
Portfolio value after 20 years	€18,061	€38,697
Total dividends over 20 years	€10,748	€16,398

Reinvesting more than doubles both the final income and the final value. In year 20 the reinvested portfolio pays €1,447 a year on an original €10,000, a yield on cost of about 14.5%. This is compound growth at work: dividends buy shares, and those shares pay dividends too. You can explore the same effect with any rate in the Compound Interest Calculator.

Dividend Yield and Yield on Cost

Dividend yield is the annual dividend per share divided by today's share price. A share costing €40 that pays €1.60 a year yields 4%. Yield on cost divides today's dividend by the price you originally paid. If the company raises its dividend for many years, your yield on cost can become far higher than the current yield, which is why patient dividend investors value steady dividend growth more than a high starting yield.

Dividends and Value Investing

For value investors, a dividend is only as good as the business behind it. A very high yield is often a warning: the share price may have fallen because the market expects the dividend to be cut. Before relying on a dividend, check that the company earns comfortably more than it pays out. The payout ratio, dividends divided by earnings, should usually leave room for bad years, and free cash flow should cover the dividend. A modest yield from a strong, growing business is usually worth more over time than a high yield from a weak one. The P/E and P/B Ratio Calculator and the DCF Calculator help you judge whether the share price itself is reasonable.

Tax on Dividends

Enter the tax rate that applies to you, or 0 to see the result before tax. In Finland, 85% of dividends from listed companies are taxable capital income, which gives an effective tax of 25.5% in the 30% bracket. In Sweden, dividends on an ordinary account are taxed at 30%, while an investment savings account (ISK) is taxed with a yearly standard charge instead. Finland's equity savings account (osakesäästötili) also defers tax on dividends until you withdraw money. Foreign dividends may have withholding tax deducted at source. Tax rules change, so check the current rules for your own situation.

Frequently Asked Questions

What is a good dividend yield?

For large, established companies, yields of roughly 2–5% are common. Yields far above that deserve a closer look at whether the dividend is sustainable. A lower yield with reliable growth can produce more income in the long run.

Does the calculator include share price changes?

Yes, in a simple way: the share price is assumed to grow at the same rate as the dividend, which keeps the yield constant. Real share prices move up and down much more than dividends do, so treat the result as an illustration, not a forecast.

Are dividends guaranteed?

No. A company can reduce or stop its dividend at any time, as many did in 2009 and 2020. This is why diversification and a margin of safety matter for dividend investors too.

Should I reinvest dividends or take them as income?

Reinvesting builds wealth faster while you are saving. Taking dividends as cash makes sense when you need the income, for example in retirement. Many investors reinvest for decades and switch to taking the income later.