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Your scenario
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Historical dividend CAGR
—- Total historical dividend change
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- Final dividend/share at your rate
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- Final annual income at your rate
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- Final income if historical CAGR repeats
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- Annual income at the ending payout
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Dividend income on a fixed number of shares
Each row is an annual income run rate, not cumulative payments. The historical-rate line is a comparison, not a prediction.
| Year | Your rate: dividend/share | Your rate: annual income | Past CAGR: dividend/share | Past CAGR: annual income |
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The dividend CAGR formula
The compound annual growth rate is the single yearly rate that links two values: CAGR = (ending annual dividend per share ÷ starting annual dividend per share)1 / elapsed years − 1. The starting payout must be positive. The ending payout may be zero; that represents a complete suspension and gives a −100% CAGR in this endpoint calculation.
Use annual dividends per share on the same basis at both dates. Adjust historical figures for stock splits and keep the treatment of special dividends consistent. Comparing one quarter with a full year would measure a change in reporting period as well as a change in dividends.
Count elapsed intervals, not the number of labels. From the end of 2020 to the end of 2025 there are five annual intervals. Six annual observations can therefore span five years. The rate uses only the endpoints; it cannot reveal cuts, suspensions or uneven increases between them.
Example: a dividend rises from $2 to $3 in five years
The total increase is ($3 ÷ $2) − 1 = 50%. The compound yearly rate is (3 ÷ 2)1/5 − 1, approximately 8.45%. Dividing the 50% increase by five gives 10%, which does not reproduce the ending payout when compounded annually.
For 100 shares, the ending $3 annual payout means $300 annual income. If your separate forward assumption is 5%, the projected dividend after another five years is $3 × 1.055 = approximately $3.83 per share, or $382.88 annually. Repeating the historical CAGR instead would imply $4.50 per share and $450 annually. The two lines deliberately answer different assumptions.
Project income without mixing in reinvestment
The forward scenario uses future annual dividend/share = current annual dividend/share × (1 + selected growth rate)years. Multiplying by a fixed number of shares gives annual income. The chart and table do not add the annual income values together.
The number of shares never changes here. A larger income stream therefore comes only from a change in the dividend per share. A dividend reinvestment plan would buy additional shares and needs a purchase-price path and payment timing; use the dividend reinvestment and income projection for that task.
A negative forward rate reduces the payout each year. A zero ending dividend remains zero under percentage growth because there is no positive base to grow. If a company resumes a suspended dividend, use the newly announced positive amount as a new starting scenario rather than expecting this formula to invent a restart.
What dividend growth does not tell you
CAGR smooths a history; it does not certify dividend quality or forecast future payments. A large percentage increase from a very small starting payout can look impressive without producing much income. Recheck unusual results against the issuer’s dividend history and the number of elapsed years.
This tool excludes market prices, taxes, fees, share purchases and sales. Dividend growth is not share-price growth, yield or total return. Use the dividend yield calculator to connect a payout to today’s share price, and compare a conservative scenario with the historical-rate illustration before using the income figure in a retirement budget.
Frequently asked questions
Why is CAGR different from total growth divided by years?
CAGR compounds from the starting value. Dividing total percentage growth by years is a simple average and generally does not reproduce the ending value when compounded.
Can I calculate growth from a zero starting dividend?
No finite percentage growth rate links a zero starting payout to a positive ending payout. Start with the first positive comparable annual dividend instead.
Does the projection reinvest dividends?
No. It holds the share count fixed and projects the annual dividend per share. Reinvestment requires a model that also buys additional shares.
Sources & model notes
Calculator, formulas and examples by FinancialDepth, checked October 23, 2026. Sources explain the underlying account or product rules; numerical projections come from the assumptions shown on this page. See our methodology and limitations.
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