Yield-on-cost is the real number
Current yield changes with price. Yield-on-COST — the dividend you receive relative to your original purchase price — only goes up as the company raises its dividend. Aristocrats bought in 1995 can yield 20%+ on cost today.
DRIP vs. cash payouts
Reinvesting dividends (DRIP) compounds share count. Taking them as cash gives you a growing income stream to spend or reallocate.
- • DRIP wins in accumulation phase (working years)
- • Cash payouts win in distribution phase (retirement)
- • Most brokers auto-DRIP for free with fractional shares
The dividend tax layer
Qualified dividends (US stocks held >60 days) are taxed at 0/15/20% depending on income — same rates as long-term capital gains. Non-qualified dividends (REITs, some foreign) are taxed as ordinary income (up to 37%). Hold REITs in a Roth IRA when possible.
Related guides
Long-form playbooks on the same topic, written by the RevenueLab editorial team.
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Read the guideFAQ
How is dividend yield calculated?
Annual dividend per share ÷ current share price × 100. If a stock at $50 pays $2/year, the yield is 4%.
What is DRIP?
Dividend Reinvestment Plan. Instead of receiving cash dividends, your broker uses the payout to buy more shares (usually fractional). Compounds your share count over time.
How often are dividends paid?
US stocks: usually quarterly. REITs and some ETFs (JEPI, O): monthly. UK stocks: often semi-annually. Ex-dividend date determines who receives the next payout.
Are dividends taxed?
Yes. Qualified dividends: 0/15/20% federal (based on income bracket). Non-qualified: your ordinary income tax rate. Roth IRA and 401(k) shelter them entirely.
What is a good dividend yield?
2–4% is typical for established payers with growth potential. Above 6% often signals stress — the market is pricing in a dividend cut. Yield traps are real; check payout ratio (<75% for most sectors).
What are dividend aristocrats?
S&P 500 companies that have raised their dividend for 25+ consecutive years. ~65 companies qualify. Includes KO, JNJ, PG, MMM, WMT.
Can dividends be cut?
Yes — dividends are never guaranteed. High-profile cuts: GE (2018), Wells Fargo (2020), AT&T (2022). Diversify across 20–30 payers to reduce single-name risk.
Should I chase high yields?
Usually no. Sustainable growth beats a high starting yield in most 10-year horizons. A 3% yielder growing 8%/year matches a 7% yielder growing 0%/year in ~13 years — and keeps growing after.
How this calculator is built
Independently maintained
Written by Sam Doshi and the RevenueLab editorial team. We don't sell the data feeds this tool is built on.
Sourced from primary data
Benchmarks come from public AdSense / Stripe / IRS disclosures and reader-submitted data — never third-party "$X per view" claims. Full methodology.
Last reviewed
July 2026. We re-check every figure on the platform on a rolling quarterly cycle.
Editorial standards
See our editorial policy and disclaimer. Results are estimates, not advice.