Pick the monthly dividend income you want and find out how much you need invested at today's yield, and how long it takes to get there with monthly contributions, dividend growth, price growth and dividend reinvestment (DRIP).
Last updated:
$/mo
%
Annual dividends ÷ current price of what you buy
%/yr
How fast the dividend per share rises
%/yr
Price appreciation, excluding dividends
$
$
%/yr
%
0 for tax-advantaged accounts; goal is after tax
Enter your values to see the result.
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How to use the Dividend Income Goal Calculator
Enter your goal: the dividend income you want each month.
Enter the dividend yield of what you plan to buy, plus expected dividend growth and price growth.
Add your plan: what you have invested now and what you can add each month.
Choose DRIP to reinvest dividends until you reach the goal, and set a tax rate if the goal is after tax.
Press Calculate to see the capital needed today, the years to the goal and the projection table.
That gives the amount you would need if you bought everything today at today's yield. To find how long it takes, the calculator simulates your plan month by month:
the share price rises by the price growth rate and the dividend per share by the dividend growth rate;
each monthly contribution buys shares at the current price;
dividends are paid at the chosen frequency and, with DRIP, used to buy more shares;
the goal is reached when your forward annual income (shares × current annual dividend per share, after tax) covers the goal.
Capital needed for common dividend goals
Monthly dividends
Yearly
At 2% yield
At 3%
At 4%
At 5%
$100
$1,200
$60,000
$40,000
$30,000
$24,000
$500
$6,000
$300,000
$200,000
$150,000
$120,000
$1,000
$12,000
$600,000
$400,000
$300,000
$240,000
$2,000
$24,000
$1,200,000
$800,000
$600,000
$480,000
$5,000
$60,000
$3,000,000
$2,000,000
$1,500,000
$1,200,000
Figures are before tax. A tax rate of 15% raises each amount by about 17.6% (÷ 0.85).
Tips for building dividend income
Yield is not everything. A 2% yield growing 8% a year overtakes a 5% yield growing 1% a year after about 14 years (2 × 1.08ⁿ = 5 × 1.01ⁿ).
Diversify. Income from many companies or a fund is safer than a few high-yield stocks.
Raise contributions with your pay. Even a 3% yearly increase in contributions noticeably shortens the timeline.
Remember inflation. $2,000 a month in 20 years buys less than $2,000 today; aim a little higher, or use a dividend growth rate above inflation.
Frequently asked questions
How much do I need to invest to make $1,000 a month in dividends?
Divide the annual income by the yield: $12,000 ÷ 3% = $400,000, ÷ 4% = $300,000, ÷ 5% = $240,000. The calculator does this for your yield and tax rate and then shows how long it takes to build that amount.
How does dividend growth shorten the time to my goal?
If a company raises its dividend each year, the income from shares you already own grows even without new money. Shares bought early earn a rising yield on what you paid for them, so dividend growth plus reinvestment creates a snowball effect.
What is the difference between dividend growth and price growth?
Dividend growth is how fast the dividend per share rises. Price growth is how fast the share price rises. If prices grow faster than dividends, the yield on new purchases falls over time; if dividends grow faster, it rises. The calculator tracks both.
Should I reinvest dividends?
Reinvesting (DRIP) while you are building the portfolio buys more shares, which pay more dividends, so you usually reach the goal sooner. Once you reach the goal you can switch to taking the dividends as cash.
What dividend yield is realistic?
Broad stock market index funds have yielded roughly 1.5% to 2% in recent years, dividend-focused funds roughly 3% to 4%, and some sectors more. Very high yields can signal a risk of a dividend cut, so it is safer to plan with a moderate yield.
Are dividends taxed?
In a regular taxable account, dividends are usually taxable in the year they are paid, at rates that depend on the type of dividend and your income. In tax-advantaged retirement accounts they are not taxed when paid. Enter your expected tax rate so the goal is calculated after tax.
Are all the tools on FreeToolCabin tested for quality and accuracy?
Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.