Calculate dividend income, DRIP growth, and yield on cost for your dividend portfolio.
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Annual dividend = Portfolio × yield. With DRIP: portfolio grows as dividends reinvested. Without DRIP: dividends paid out, portfolio grows by appreciation only. Yield on cost = final dividend / original cost.
At 4% average yield, you need $1M to generate $40K/year. At 3% yield (safer, more growth-oriented): $1.5M for $45K/year.
DRIP automatically reinvests dividends to buy more shares. Over 20 years, DRIP turns a $100K investment at 3% yield and 5% growth into ~$432K vs $265K without.
2-4% is sustainable and typical. Above 5-6% may signal financial distress. REITs, MLPs, and BDCs often yield 5-10% but carry different risks.
Depends on goals. Dividend stocks provide income and stability. Growth stocks reinvest profits for appreciation. Many investors use both.
Qualified dividends: 0%, 15%, or 20% (like long-term capital gains). Non-qualified dividends: taxed as ordinary income. REITs pay mostly non-qualified.
Calculations are for educational purposes only. Consult a qualified financial advisor for personalized advice.