Question 1

What is a dividend growth calculator?

Accepted Answer

A dividend growth calculator projects how your annual dividend income will increase over time as a company raises its dividend each year. Unlike a DRIP calculator (which models reinvestment of dividends), a dividend growth calculator shows the pure income growth effect: if you invest $10,000 in a stock with a 3% yield that grows its dividend at 7%/year, in 10 years you'll be earning 5.9% on your original cost (yield-on-cost), and in 20 years you'll earn 11.6%.

Question 2

What is yield on cost?

Accepted Answer

Yield on cost (YOC) is your current dividend yield calculated on your original purchase price, not the current stock price. If you bought stock at $100 with a $3 dividend (3% yield), and the dividend grew to $6 over 10 years, your yield on cost is 6% — even though the stock's current yield based on its current price might be different. YOC grows every year a company raises its dividend, which is why long-term dividend growth investors value it highly.

Question 3

What dividend growth rate should I use?

Accepted Answer

Conservative: 3-5%/year (slow growers like utilities, telecom). Moderate: 5-8%/year (consumer staples, healthcare). Aggressive: 8-12%/year (technology, high-growth industrials). Historical averages: SCHD has grown ~10%/year, KO ~5%/year, JEPI is variable. For long-term projections, 5-7% is considered a reasonable assumption for quality dividend growth stocks.

Question 4

How long does it take for dividends to double with dividend growth investing?

Accepted Answer

Using the Rule of 72: divide 72 by your annual dividend growth rate to get the approximate years to doubling. At 6%/year growth, dividends double in 12 years. At 8%/year, they double in 9 years. At 10%/year (SCHD's historical rate), dividends double in about 7.2 years. This means a $4,000/year income from dividends becomes $8,000/year in 7-12 years on the same investment — without adding a single dollar more.

Dividend Growth Calculator 2026

📈 Dividend Growth & Yield-on-Cost Calculator

Why Dividend Growth Rate Matters More Than Starting Yield

Quick Reference: Dividend Doubling Time (Rule of 72)

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