Dividend Growth Rate
Quick definition: The dividend growth rate is how fast a company's dividend per share increases, usually shown as an average percentage per year.
In plain English
It measures the average yearly increase in the dividend. A common way to calculate it is as a compound annual rate:
Growth rate = (latest dividend ÷ older dividend) ^ (1 ÷ years) − 1
Example
A company paid $1.00 per share ten years ago and pays $1.61 today. That is about 4.9% a year.
Why it matters
Your income grows only if the dividend grows. A moderate yield with strong growth can end up paying you more than a high yield that never rises. See yield on cost.
Common mistakes
- Extrapolating a few good years. Growth can slow as a company matures.
- Ignoring that growth needs earnings growth. A rising payout ratio cannot continue forever.
Investment Disclaimer
All information and tools on this website are provided for informational
purposes only. The calculations, examples, and projections are simplified
estimates and may not reflect real-world investment results.
Nothing on this website should be interpreted as financial, investment,
tax, or legal advice. You are solely responsible for your investment
decisions and any outcomes resulting from them.
Past performance and projected returns do not guarantee future results.
Always conduct your own research and consult a qualified financial advisor
before making investment decisions.