Dividend Growth Calculator

Dividend growth calculator projects future dividend income from companies that consistently raise payouts. Uses constant growth model: future dividend = current × (1 + growth)^years. Also calculates Gordon Growth Model fair value: P = D × (1+g) / (r-g), where D is current dividend, g is growth rate, r is required return.

Example: 100 annual dividend, 7% growth, 10 years projection. Year 10 dividend = 100 × 1.07^10 = 197 (nearly doubled). Sum of all dividends over 10 years ≈ 1,475. Gordon fair value at 9% required return: 100 × 1.07 / (0.09 - 0.07) = 5,350 fair value per share - the dividend growth justifies large premium to current dividend.

Dividend Aristocrats: S&P 500 companies with 25+ years of dividend increases (Coca-Cola, Procter & Gamble, Johnson & Johnson). Average aristocrat dividend growth: 8-10% annually. Equivalent: dividend heroes (City of Investment Trust, Bankers Investment Trust). Reliable dividend growth + reinvestment = powerful long-term compounding strategy.

A worked example

Try the defaults: current annual dividend of 100, annual growth rate of 7%, years to project of 10 years, required return of 9%. The tool returns 196.72. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Current Annual Dividend, Annual Growth Rate %, Years to Project, and Required Return %. The rate and the time horizon usually dominate — compounding means a small change in either reshapes the final figure more than a similar shift in contribution size. Test this by doubling one input at a time.

The formula behind this

Future dividend = current × (1 + growth)^years. Gordon fair value = current × (1 + g) / (r - g). Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

Where this fits in planning

This is a "what-if" tool, not a forecast. Use it to test ideas before committing: what happens if the rate is 2% lower than hoped, what happens if you add five more years. The value is in the scenarios you run, not the single answer you get from the defaults.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. The number represents one scenario rather than a forecast.