1. What is Dividend Growth Rate?

The Dividend Growth Rate measures the percentage increase in dividend payments from one period to the next. It indicates how quickly a company is increasing its dividend payments to shareholders over time.

2. How Does the Calculator Work?

The calculator uses the dividend growth rate formula:

Where:

• \( g \) — Dividend growth rate
• \( D1 \) — Current dividend payment
• \( D0 \) — Previous dividend payment

Explanation: This formula calculates the percentage change between consecutive dividend payments, showing the rate at which dividends are growing.

3. Importance of Dividend Growth Rate

Details: Dividend growth rate is a key metric for income investors. A consistently high growth rate indicates a healthy, growing company with strong cash flow and commitment to shareholder returns.

4. Using the Calculator

Tips: Enter the current dividend (D1) and previous dividend (D0) in dollars. Both values must be positive numbers. The result shows the growth rate as a percentage.

5. Frequently Asked Questions (FAQ)

Q1: What is a good dividend growth rate?
A: A good growth rate depends on the industry and company size, but generally 5-10% annually is considered strong for established companies.

Q2: How often should I calculate dividend growth rate?
A: Typically calculated annually to track year-over-year growth, but can be calculated quarterly for more frequent analysis.

Q3: Can dividend growth rate be negative?
A: Yes, if the current dividend is lower than the previous dividend, the growth rate will be negative, indicating a dividend cut.

Q4: What factors affect dividend growth rate?
A: Company earnings, cash flow, payout ratio, industry conditions, and management's dividend policy all influence growth rates.

Q5: Is high dividend growth sustainable?
A: Very high growth rates (over 15-20%) are often unsustainable long-term. Look for consistent, moderate growth over many years.