For generate passive income, investing in dividend paying stock is one of the best way now days. SO, dividend calculator can help you to estimate your earnings with proper accuracy. There is another way to calculate dividend, which is manual calculation. But, it can be more time consuming then calculator.
If you are a beginner, intermediate or experienced investor; using a stock dividend calculator can help you effectively. In this article we will going to discuss what is dividend calculator, how it works, monthly dividend calculator, how to calculate dividends manually and etc.
What is a Dividend Calculator?
A dividend calculator is an online tool that can helps to the investors to estimate their dividend income which is based on stock holdings, dividend yield as well as reinvestment plans. In that users need to put some basic key details like number of shares, dividend per share and frequency of payouts that you can project for your earning over the time.
What are the reasons to use a Dividend Calculator?
Accuracy: While using the calculator, user can get more accuracy in the calculation as compare to human. So, there is low chance to get error in computations.
Saves Time: By using dividend calculator, users can save their time. There is no need for any kind of manual calculations while using this tool.
Comparison: This tool allows you to compare different dividend stocks for the future benefits.
Future Projection: Calculator helps in long-term investment planning and benefits.
Types of Dividend Calculators
There are different types of calculators with different purposes. Let’s see some common types of calculator here:
Simple dividend Calculator
This calculator is best for some quick results. You can get quick estimates by using this. But, it requires some basic inputs like; how many shares you owned, dividend per share and etc.
It is a simple and easy to use so that, useful tool for the beginners.
Advanced Dividend Reinvestment Calculator (DRIP)
This tool useful for automatically adds your dividends back into your investment and compounding the results. it can helps to shows that your money can grow over the years.
This advanced tool helps you to see how much wealth you can build in the long term basis.
Monthly Dividend Calculator
In this tool, users need to focuses on those stocks which gives monthly payouts like; REITs. It can help in setting budget for the passive income.
How to Calculate Dividends Manually
Here is the basic formula for the calculating dividends manually, which is a traditional method to calculate before calculators come.
Formula:
The simple way to calculate dividends is,
Annual Dividends=Number of Shares×Dividend Per Share (DPS)
Here is an example of the calculation: If you own 100 shares of a company that pays ₹180 per share annually, your total dividend income would be:
100×180= ₹18,000/- per year
Monthly Dividend Calculation:
There are many of investors, who are looking or prefer for stocks which pays on the monthly basis. So, here is the estimates for the monthly payouts.
Monthly Dividend= Annual Dividend/12
By using previous example calculation:
18,000/12 = ₹1500/- Per Month
In many cases a monthly dividend calculator automates the process pf calculating dividend, to make it easy to track the cash flow.
How to Use a Dividend Calculator
- Most of the calculators follow a same kind of structure. Here is step by step explanation that how to use it:
- At the first step, Need to enter the number of Shares you own, for example you own 100 shares.
- After that in second step you have to input the dividend per share (DPS), for example ₹150 per share as an annually.
- Once you put these information, at the third step you have to select the payout frequency like; Annually, quarterly or monthly.
- At the last, you need to choose Reinvestment options if there is any applicable; And you can automatically reinvest dividends to buy additional more shares.
- Finally, the estimate results you can see annual, quarterly or monthly payouts.
Here is the Example of Calculation
| Input | Value |
|---|---|
| Shares Owned | 100 |
| Dividend Per Share | ₹150.00 (annual) |
| Payout Frequency | Quarterly |
| Reinvest Dividends? | No |
Results:
- Annual Dividend: 100 X 150 = ₹15,000/-
- Quarterly Dividend: ₹15,000 / 4 = ₹3,750/- per quarter
Conclusion
A dividend calculator is one of the essential tool for investor who are willing to invest in shares. You can use a simple dividend calculator as well as DRIP calculator (for long term projections). So, these tools are helps you to optimize your investment strategy.
FAQs
Can a dividend calculator account for stock splits?
Some advanced calculators adjust for splits, but basic ones may not. Always verify manually if needed.
Are dividends paid monthly?
Most companies pay quarterly, but some (like REITs) pay monthly.
How accurate are dividend calculators?
They provide estimates based on current data. Actual payouts may vary if companies change dividend policies.
