Dividend Calculator
Project your passive income from stocks and REITs and see the power of reinvestment
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What are Dividends?
Dividends are portions of profit that companies distribute to shareholders. It's a form of passive income - you receive money regularly just for owning stocks. REITs work similarly, distributing rental income.
In Brazil, dividends from Brazilian stocks and REITs are TAX-FREE! This makes this strategy even more attractive for building passive income.
Dividend Yield (DY) Explained
Dividend Yield is the percentage of dividends over the asset price. For example: stock costs $20 and pays $1.20 in annual dividends. DY = 1.20 / 20 = 6% per year.
Important: DY varies with price. If stock rises to $30, DY drops to 4%. If it falls to $15, DY rises to 8%. Use historical averages for projections.
Yield on Cost (YoC)
YoC is the yield on YOUR purchase price, not the current price. It's the most important metric for long-term investors.
Example: You bought stock for $20. Today it's worth $40 and pays $2/year. Current DY: 5% (2/40). Your YoC: 10% (2/20)! With dividend growth, your YoC increases each year.
How to Use the Calculator
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Enter how much you will invest initially and monthly.
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Set the Dividend Yield: Blue chip stocks 3-5%, dividend stocks 5-7%, REITs 6-9%.
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Define dividend growth: mature companies 0-3%, growing companies 5-10%.
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Check 'Reinvest dividends' to maximize returns with compound interest.
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Click Calculate and see your passive income trajectory!
Practical Examples
Building $2,000/month Income in 15 Years
Initial investment: $20,000 | Monthly: $1,000 | DY: 6% | Growth: 5% | Appreciation: 8% | Reinvest: Yes - Result: Portfolio $580,000 | Monthly dividends: $2,400 | Yield on Cost: 18%
REITs for Retirement
Initial investment: $50,000 | Monthly: $2,000 | DY: 7% | Growth: 3% | Appreciation: 5% | Period: 20 years - Result: Portfolio $1,200,000 | Monthly income: $6,800 | Total invested: $530,000
Power of Reinvestment
$10,000 initial, no contributions | DY 6%, growth 4%, appreciation 8% | 20 years - WITH reinvestment: $950/month | WITHOUT reinvestment: $400/month | Difference: 137% more income!
Dividend Income Strategies
Diversification
Invest in 8-15 different stocks/REITs, from various sectors (banks, energy, retail, real estate). Mix of high yield + growth.
Blue Chip Companies
Choose companies with consistent payment history, stable profitability, and low cut risk. Examples: established dividend aristocrats.
Always Reinvest
Reinvested dividends buy more assets, which generate more dividends. It's the snowball effect of compound interest.
Focus on Yield on Cost
Don't worry too much about price fluctuations. With time and dividend growth, YoC of 15-20% is possible.
Important Tips
High dividend yield isn't always good: Yield >12-15% may indicate troubled company or unsustainable dividend.
Payout ratio matters: Company distributing >100% of profits can't grow dividends.
History > Promise: Check if company has paid dividends consistently for 5-10+ years.
REITs vs Stocks: REITs have higher yield but less growth. Stocks grow more, lower initial yield.
Tax exemption is huge: 6% tax-free dividend equals ~8-9% taxed. Take advantage!
Reinvest for the first 10-15 years: After reaching income goal, then you can withdraw to use.
Be patient: Dividend income is a decades-long strategy. First years: small income. After 10-15 years: exponential effect.
Diversify sources: Dividend income should complement, not be the only source of income.
Frequently Asked Questions
How much do I need to invest to live off dividends?
Depends on your cost of living. Formula: Monthly expenses × 12 / Dividend Yield. For $5,000/month with 6% DY, you need ~$1 million.
Are dividends guaranteed?
No. Companies can cut dividends in crises. That's why diversification and choosing solid companies is essential.
What dividend yield is good?
Brazil: 5-7% is good for stocks, 6-9% for REITs. Above 10-12%, be suspicious (may be unsustainable).
Is growth or high yield better?
Young/long-term: prefer growth (YoC increases over time). Near retirement: high yield (immediate income).
Should I reinvest dividends?
Yes, until you reach your passive income goal. The effect of compound interest is enormous over 10-20 years.
REITs or stocks for dividends?
REITs: higher yield, stability, less growth. Stocks: lower initial yield, higher growth. Ideal: mix of both.
Do dividends pay monthly?
Varies. REITs usually monthly. Stocks: monthly, quarterly, or semi-annually. Diversify to receive frequently.
Do I need to declare dividends on taxes?
Yes, but they're tax-exempt (Brazil). Just declare as 'exempt income'. Capital gains on sale are taxed.
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