How to use it
- Use the formula below with your own figures.
The formula
Annual income = shares × dividend per share.
Worked example
1,000 shares paying $2 each yields $2,000 a year.
Frequently asked questions
What is yield?
Annual dividend ÷ share price.
Are dividends guaranteed?
No — companies can cut them.
Tips
- Time in the market beats timing the market.
- Reinvest returns to let compounding work.
- Keep fees low — they compound against you.
Key terms
- Compounding
- Earning returns on past returns.
- CAGR
- The smoothed annual growth rate.
- Yield
- Income as a percent of price.