AFTER 10 YEARS
|
Ending Balance
|
Total Return
|
Avg. Annual Return
|
Annual Dividend Income
|
Total Dividend Payment
|
Yield On Cost
|
|
$10,000.00
|
0.00%
|
0.00%
|
$500.00
|
$5,000.00
|
5.09%
|
EACH YEAR
|
Year
|
Shares Owned
|
Annual Dividend Per Share
|
Annual Dividend
|
Compound Frequency
|
With DRIP
|
Annual Contribution
|
Year End Shares Owned
|
Year End Stock Price
|
New Balance
|
|
1
|
100.00
|
$5.00
|
$500.00
|
Quarterly
|
$10,509.45
|
$0.00
|
105.09
|
$100.00
|
$10,509.45
|
|
1
|
100.00
|
$5.00
|
$500.00
|
Quarterly
|
$10,509.45
|
$0.00
|
105.09
|
$100.00
|
$10,509.45
|
|
1
|
100.00
|
$5.00
|
$500.00
|
Quarterly
|
$10,509.45
|
$0.00
|
105.09
|
$100.00
|
$10,509.45
|
|
1
|
100.00
|
$5.00
|
$500.00
|
Quarterly
|
$10,509.45
|
$0.00
|
105.09
|
$100.00
|
$10,509.45
|
|
1
|
100.00
|
$5.00
|
$500.00
|
Quarterly
|
$10,509.45
|
$0.00
|
105.09
|
$100.00
|
$10,509.45
|
|
1
|
100.00
|
$5.00
|
$500.00
|
Quarterly
|
$10,509.45
|
$0.00
|
105.09
|
$100.00
|
$10,509.45
|
|
1
|
100.00
|
$5.00
|
$500.00
|
Quarterly
|
$10,509.45
|
$0.00
|
105.09
|
$100.00
|
$10,509.45
|
FAQ
What are dividends?
Dividends are payments that publicly traded companies make to their shareholders. Companies that offer dividends share their profits with their investors. Companies that pay dividends usually do so quarterly.
Dividends can also be paid over other time frames, for example monthly or yearly. Dividends provide investors with a regular source of income. They can also offer protection against market volatility. The company’s board of directors determines the dividend amount per share. If a company pays out a $5 dividend every quarter and you own 20 shares, you will receive $100 in dividends quarterly.
Dividend payments are usually paid in cash. Some companies enable investors to automatically reinvest their dividends. This is called DRIP (dividend reinvestment plan).
Why is dividend yield important?
Dividend yields are important. They show annual dividend payout relative to share price. Dividend yield offers a way to understand returns as a proportion of your investment. As companies pay dividends on a per-share basis, this makes it easier to compare payouts.
What is DRIP?
Dividend reinvestment plans, also known as DRIP, are when companies automatically reinvest investors’ dividends to buy more shares. Most companies do not have DRIP.
The advantage of reinvesting dividends is that they compound.
How do you calculate dividend payments that are reinvested?
The formula for calculating dividend reinvestment is:
FV = P * (1+ r/m)^mt
Where
FV = future value of the investment
P = the money invested or initial balance
r = the dividend yield (in decimals)
m = the number of times the dividend is compounded per year (compounding frequency)
t = the numbers of years the money is invested for
This may seem complicated, however that’s exactly why we created this stock dividend calculator.
First calculate dividend yield using the formula
Dividend yield = annual dividend/ stock price * 100
If a share price is $50 and the annual dividend is $3.50, dividend yield is calculated using the formula:
Therefore:
Dividend yield = $3.50 / $50 = 0.07
Now, entering the variables into the dividend reinvestment formula:
Final balance = $1,000 * (1 + 0.07/1) = $1,144.90
This means investing $1,000 into a company with 7% dividend yield would result in a $144.90 profit after two years and a total of $1,144.90, if dividends are reinvested over one year.
Calculations based on EOD prices
