Dividend Yield: The annual dividend payment as a percentage of the stock price. A 3.5% yield on a $100 stock pays $3.50/year per share.
DRIP: Dividend Reinvestment Plan automatically uses dividend payments to buy more shares, compounding your returns over time.
Dividend Growth Rate: Many quality companies increase their dividends annually. The S&P 500 dividend aristocrats have raised dividends for 25+ consecutive years.
Yield on Cost: Your current annual dividend divided by your total cost basis. This grows as dividends increase, even if the current yield stays flat.
Year N Value = (Previous Value + Contributions + DRIP Dividends)
× (1 + Price Appreciation Rate)