Calculating Dividend Growth Rate – Cost Calculator

Dividend Growth Rate Calculator

Calculate the Compound Annual Growth Rate (CAGR) of your dividend income.

Initial Dividend Per Share ($)

Current/Final Dividend Per Share ($)

Time Period (Total Years)

Calculation Results

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Understanding Dividend Growth Rate

The Dividend Growth Rate (DGR) is the annualized percentage rate of growth that a particular stock's dividend undergoes over a specific period of time. For long-term income investors, this metric is often more important than the current yield because it indicates the company's ability to increase its payouts consistently.

How to Calculate Dividend Growth Rate

This calculator uses the Compound Annual Growth Rate (CAGR) formula to determine the smooth rate of return as if the dividend grew at a steady rate over the specified time period. The formula used is:

            DGR = [(Final Dividend / Initial Dividend)^(1 / Years)] – 1
        

Practical Example

Imagine you bought a stock 5 years ago that was paying an annual dividend of $1.50. Today, that same company pays a dividend of $2.25. To find the growth rate:

Initial Dividend: $1.50
Final Dividend: $2.25
Years: 5
Calculation: ($2.25 / $1.50)^(1/5) – 1 = 8.45%

In this scenario, your dividend income from this stock has grown at an average annual rate of 8.45%.

Why DGR Matters for SEO & Portfolio Analysis

High dividend growth is a hallmark of "Dividend Aristocrats" and "Dividend Kings." It signals a company with a strong moat, healthy cash flows, and a management team committed to returning capital to shareholders. When analyzing stocks, comparing the DGR against the inflation rate is crucial to ensure your purchasing power increases over time.

function calculateDGR() { var initialDiv = parseFloat(document.getElementById('initialDividend').value); var finalDiv = parseFloat(document.getElementById('finalDividend').value); var years = parseFloat(document.getElementById('yearsCount').value); var resultArea = document.getElementById('resultArea'); var growthOutput = document.getElementById('growthOutput'); var resultText = document.getElementById('resultText'); if (isNaN(initialDiv) || isNaN(finalDiv) || isNaN(years) || initialDiv <= 0 || finalDiv <= 0 || years <= 0) { alert("Please enter valid positive numbers for all fields."); return; } // CAGR Formula: ((Final / Initial)^(1 / Years)) – 1 var growthRate = (Math.pow((finalDiv / initialDiv), (1 / years)) – 1) * 100; var totalIncrease = ((finalDiv – initialDiv) / initialDiv) * 100; growthOutput.innerHTML = growthRate.toFixed(2) + "% Annual Growth"; resultText.innerHTML = "Your dividend increased by a total of " + totalIncrease.toFixed(2) + "% over " + years + " years. This represents a compound annual growth rate of " + growthRate.toFixed(2) + "%."; resultArea.style.display = 'block'; }