How the rate is worked out on this page
The dividend growth rate is the one steady yearly rate that would carry the dividend a share from the first figure to the second over the years you measured. It is the compound rate of the dividend itself, not of the share price and not of your account balance, and it is worked out from the two dividends you type and nothing else.
Dividend growth rate = (dividend now / dividend at the start) ^ (1 / years) minus 1
then × 100 to read it as a percent
The ratio of the two dividends is the multiple: how many times over the dividend grew in total. The root is that multiple taken to the power of one over the years, and the rate is the root minus 1, read as a percent. The page prints every one of those steps with your own figures under the result, rather than only the last one, so you can follow it and check it. Here it is with an example, 1.20 a share at the start, 1.80 a share now, six years between them, 500 shares held:
Dividend a share at the start = 1.20
Dividend a share now = 1.80
Years between = 6
Multiple = 1.80 / 1.20 = 1.5
Root = 1.5 ^ (1 / 6) = 1.06991319
Growth rate = (1.06991319 minus 1) × 100 = 6.99%
Total growth = (1.5 minus 1) × 100 = 50.00%
Doubling = ln(2) / ln(1.06991319) = 10.257 years
Income then = 1.20 × 500 = 600.00 a year
Income now = 1.80 × 500 = 900.00 a year
Change = 900.00 minus 600.00 = 300.00 a year
So the figure is 6.99% a year. Over the six years the dividend a share rose 50.00% in total, and at that pace it would take another 10.257 years to double again from 1.80. On 500 shares the same run says the income went from 600.00 a year to 900.00 a year, a rise of 300.00, which is the same 50% read in money rather than in percent.
Every figure is cut off downwards, never rounded up
One line, and it is the rule everywhere on this site: nothing here is ever rounded up. The multiple and the years are shown to four decimals, the root to eight, the rate and the total growth to two, and each figure is cut off at that point rather than brought to the nearest. The figure on the screen is therefore never higher than the number it came from.
Each line of the working is worked out from the line above it exactly as that line is printed. Check the arithmetic with the figures on the screen and the last step lands on the printed answer. The year table carries the eight-decimal root forward once a year, so its last row can sit a fraction below the dividend you typed — on the example above the year 6 row reads 1.7999 against the 1.80 you entered, and that 0.0001 is the cut compounding six times, not an error in the sum.
The direction is the point
Most calculators built around dividend growth run the same way: you type a starting amount, a starting yield and a growth rate, and the page projects the portfolio forward. The growth rate is a box you fill in, and the hardest figure in the whole sum is the one you had to bring with you. One of the pages ranked for this word explains the rate formula in its text, works an example in prose, and still takes the rate as a required input in its own calculator. The rate itself normally comes from working backward through a company's actual dividend history, and that working is exactly what this page does: two dividends you already have, the years between them, and the rate falls out of the division.
That is also why there is no box here for a yield, a price or an assumed return. A starting yield needs a share price, and a projection needs an assumption about the future, and neither is a figure you can read off a dividend history. What you can read off it is what the shares paid a year then and what they pay a year now, and that pair is the whole input.
What counts as the dividend a share
Use the annual dividend a share on both ends, measured the same way. A quarterly payer's annual figure is its last four payments, or its declared quarterly rate times four if the rate has been steady. A monthly payer is twelve payments. Do not mix a declared forward rate on one end with a trailing sum on the other: the rate that comes out measures the change between two different kinds of number, and it is not a growth rate in the sense this page uses.
Special and one-off dividends are worth taking out of both ends, or out of neither, but not out of one. And if a split happened inside the stretch, put both dividends on the same per-share basis first: a 2-for-1 split halves the dividend a share without cutting what a holder receives, and leaving it in makes a raise read as a cut. Adjust one end or the other so both counts are per the same share, then type them in.
The year table stops at today
The table under the working shows the dividend a share for each year of the stretch you measured, from the start figure to now. It is the path the rate implies between two dividends you already have, one line a year, and it ends at the dividend the shares pay now. It does not carry forward past today, and nothing on this page says anything about a year you have not had yet.
That is a deliberate boundary, and it is the main difference between this page and every projection calculator: those run one to fifty years ahead on rates you supplied, this one stops where your dividend history stops. Whether the rate you have just measured keeps going is a question about the company, its earnings and its board, and no division of two numbers answers it.
When the dividend falls, and when it reaches zero
A fall is printed with a minus sign and read as a fall. Put in 1.80 at the start and 1.20 now over six years and the multiple is 0.6666, the rate comes out at minus 6.54% a year, and the total change is minus 33.34%. The box that reads as doubling years on a rise reads as halving years on a fall: at that rate the dividend a share would take 10.2545 years to be cut in half again. The note under the result says plainly that the rate is negative, so the minus sign is the fall and not a mistake.
A dividend now of 0 is worked out rather than refused. The multiple is 0, the rate is minus 100 percent, and the page prints the whole working with a line saying what it means: every dollar of the dividend went away over the stretch. There is no doubling or halving figure to give in that case, and the page says so rather than printing one.
Two identical dividends give a rate of 0.00% and no doubling figure at all, because a rate of zero never doubles anything. That result can hide a rough ride: a cut in year two and a raise after it can land back on the same figure, and the rate only sees the two ends. If the path matters, run the page once per leg of the history and read the two rates beside each other.
What this page cannot work out
The two dividends, the years and the optional share count are the whole input. These things are outside it, and none of them is a rounding difference:
- A projection. No field here carries the dividend forward past the figure you typed as now, and no box produces a portfolio value in 2046. Every projection calculator does that; this page does the step before it.
- Reinvestment. Dividends reinvested buy shares, and shares pay dividends, which is a compounding loop of its own. The dividend reinvestment calculator handles the shares side of it, and this page never mixes the two.
- Taxes, fees and currency. Nothing is deducted and nothing is grossed up. The rate is the rate of the declared dividends you typed.
- The share price, the yield and yield on cost. A price would make a yield out of the dividend, and a yield that moves with a price you also have to supply is a different question. The dividend calculator works out yield on cost from a price and a dividend you type.
- More than one holding. Two tickers with different dividend histories are two runs of this page, not one. A blended rate across holdings is not a dividend growth rate in any sense this page would stand behind.
- Whether the rate will continue. Arithmetic on two past figures says nothing about the next declaration. The page does not grade the rate either: whether 6.99% is good depends on the company, the payout ratio and what else the money could do, and none of those is an input here.
There are no live prices and no dividend lookups anywhere on this page. Both dividends, the years and the share count are typed by you and nothing is fetched, so every figure on the screen traces back to your own numbers.
The same formula in a spreadsheet
Put the dividend a share at the start in A1, the dividend a share now in A2 and the years between in A3. As a formula, typed into any empty cell:
=(A2/A1)^(1/A3)-1
Format the cell as a percentage to read it. The years go in as a plain number, 6 rather than a date pair, because dividends are declared a year at a time and there is no purchase date to count days from.
One difference is worth knowing about: a spreadsheet rounds a number when it displays it but keeps the full value underneath, while this page cuts every figure down at the point shown. On the same inputs the last decimal can differ, and when it does, this page is the one that matches the working printed above it.
The same holding, other questions
The rate is one question about a dividend history, and others come up beside it. If you want what the holding pays today rather than how fast the dividend has moved, the dividend calculator works out the income per payment, per month and per year from the dividend you type. If you want the income spread over the months of a year and carried forward with a growth rate you supply, the monthly dividend calculator does that. If the same compound rate is wanted on what the position cost rather than on the dividend, the CAGR calculator takes two values and two dates. And if the shares were bought at more than one price, the average down calculator pools them into one figure per share.
Frequently asked questions
How do I calculate the dividend growth rate?
Divide the dividend a share now by the dividend a share at the start to get the multiple. Take that multiple to the power of one over the number of years, then subtract 1. Multiply by 100 and you have the rate as a percent. With the example above: 1.80 / 1.20 = 1.5, then 1.5 ^ (1 / 6) = 1.06991319, then (1.06991319 minus 1) × 100 = 6.99%. Those are the same steps the boxes above run on your own figures, and the page prints each one rather than only the last.
Is a dividend growth calculator the same as a dividend calculator?
No, and the difference is the direction of the question. A dividend calculator takes a dividend you are paid and a holding, and tells you the income: per payment, per month, per year. A dividend growth calculator takes two dividends from two points in time and tells you how fast the dividend itself has been growing. One answers what the holding pays; the other answers how the payment has moved. This page does the second, and its income figures are the two endpoints of the stretch rather than a forecast.
What dividend growth rate should I use?
The honest answer is the one your own dividend history produces, which is what this page works out. Type the dividend a share from the start of the stretch you care about, the dividend a share now, and the years between. A five or ten year stretch smooths out one bad year better than a two year stretch does. What the figure then does in someone else's projection is not something arithmetic can settle: a rate measured on the past is a measurement, and using it as an assumption for the future is a decision, and this page keeps the two apart rather than quietly doing the second for you.
Why does my rate not match the one on a data site?
Three ordinary reasons, in the order they turn up. The stretch is different: a rate over five years and a rate over ten are different figures for the same history. The dividend measure is different: a trailing sum of four payments and a declared forward rate are not the same number, and one site uses each. And the rounding is different: a data site rounds to the nearest at display, this page cuts down, so the last decimal can differ by one. If the stretch and the measure match and the figures still disagree by more than a decimal, the two ends are not the same two dividends.
Does it work for ETFs and REITs?
The arithmetic does not care what paid the dividend, so a fund's distributions a share work the same way. Two things are worth knowing first. Fund distributions move with what the fund owns and pays out, so a distribution growth rate on a fund measures the payout history rather than a policy the way a company's dividend run does. And some funds return capital inside the distribution, which makes the per-share figure drift away from income; if that applies to the fund, take it out of both ends or leave the whole question alone rather than feed a mixed figure in.
Can I enter quarterly figures instead of annual ones?
Yes, as long as both ends are on the same footing. Two quarterly rates, three years apart, give the growth rate of the quarterly dividend, which is the same rate as the annual one when the payment count has not changed. Mixing one quarterly figure with one annual figure divides two different things and produces a number that looks like a rate and is not one. When in doubt, add the four payments either side and enter the annual pair.