Phase 2 · Wealth & Leverage
Dividend Income Calculator
Your portfolio is a paycheck you don't have to show up for. See the real after-tax cash it pays each month — and how rising dividends grow that paycheck year after year.
Under the hood
The math, fully exposed
We price the income, tax it correctly by type, then grow it with rising payouts:
Annual income = portfolio × yield
Tax: qualified → 0% / 15% / 20% (capital-gains rates) · ordinary → your marginal bracket
Net income = annual income − tax
Income in N years = annual income × (1 + dividend growth)N
Yield on cost (year N) = income(N) ÷ original portfolio
- Growth is the missing lever: a flat-yield calculator shows a static paycheck. Real dividends rise, so your income — and your yield on cost — climb every year you hold.
- Tax treatment is not a detail: the same yield nets very differently as qualified vs ordinary income. We map your bracket to the capital-gains rate for qualified dividends (0% up to the lower bracket, 20% at the top).
- Yield vs safety: a sky-high yield often signals risk of a cut, which would slash this income. A moderate, growing dividend usually compounds to more, with less drama.
Your directives
What to do next, based on your numbers
Adjust the sliders to generate tailored recommendations.
Answers
Frequently asked questions
How much income will my portfolio generate in dividends?
Your forward annual income is simply portfolio value × blended yield — a $500,000 portfolio at a 3.5% yield pays about $17,500 a year before tax. But that's only the starting point: companies raise their dividends over time, so a quality income portfolio pays you more every year without you adding a dollar. This calculator projects that growth and the after-tax cash that actually reaches you.
How are dividends taxed?
Qualified dividends (most US stocks held long enough) are taxed at the lower long-term capital-gains rates — 0%, 15% or 20% depending on income. Ordinary (non-qualified) dividends — including most REITs and some foreign stocks — are taxed at your full marginal income rate. The difference is large, which is why where you hold income assets (taxable vs IRA) matters as much as what you hold.
What is yield on cost?
Yield on cost is your current annual dividend divided by what you originally invested, not today's price. As companies raise their payouts, your yield on cost climbs well above the headline yield — a stock bought at 3.5% can pay 6%+ on your original cost a decade later. It's the quiet superpower of dividend-growth investing, and exactly what flat-distribution calculators miss.
How much do I need invested to live off dividends?
Work backwards: required portfolio = desired annual income ÷ (yield × after-tax factor). To net $5,000/month ($60,000/year) at a 3.5% yield taxed at 15%, you'd need roughly $2.0M invested. A higher yield lowers the target but often raises risk, and dividend growth means you can start below the number and let rising payouts close the gap.