# Dividend income and reinvestment calculator documentation

Inputs, formulas, assumptions and API/MCP examples for the dividend income and reinvestment calculator. Reproduce a calculation and cite its sources.

Canonical calculator: https://klarfort.com/tools/dividend-calculator/
Content updated: 2026-09-07
Assumptions reviewed: 2026-09-07

## Overview
Project an investment that pays dividends and compare keeping those payments as cash with reinvesting them. DRIP means dividend reinvestment plan, modeled here as buying fractional shares with net dividends.

Income-target mode estimates the capital needed to support an entered monthly dividend income at the starting yield and tax rate. The projection separately allows dividend-per-share and share-price growth.

## How to use
1. Choose a growth projection or an income-target calculation and select the currency.
2. Enter the starting investment, projection months, monthly contribution and any monthly income target.
3. Set the initial annual dividend yield, dividend growth, price growth and dividend tax rate.
4. Choose whether to reinvest dividends, then calculate and compare invested value, retained cash and projected income.

## Understanding the result
Projection value includes both the investment balance and cash dividends retained without interest. Reinvesting uses dividends after the entered tax to buy additional shares at each month's ending price.

Required capital uses the initial after-tax yield and excludes future growth. Projected monthly income reflects the shares and dividend-per-share level reached at the end of the projection.

## Questions
### Does a higher share price automatically raise dividends?
No. Share-price growth and dividend-per-share growth are independent inputs. The starting yield establishes the initial payout, then the dividend growth input changes that payout over time.

### What happens when dividends are not reinvested?
Net dividends accumulate as cash without earning interest. They remain part of total projected wealth, but they do not buy more shares or increase later dividend income.

### Why can the income target show an unavailable result?
A positive target requires a positive after-tax starting yield. A zero yield or a 100% dividend tax cannot fund positive income in this model, so no finite capital amount is returned.

## Default worked example
Projected wealth: 10,407.42 USD. Dividend illustration using your yield, growth, tax and reinvestment assumptions. Assumptions as of 2026-09-07.

## Formula
Income-target capital = monthly income × 12 / (dividend yield × (1 − tax)). Monthly dividends = shares × dividend per share; reinvestment buys shares at the ending monthly price.

- The initial modeled share price is one currency unit. Beginning-month contributions buy shares; monthly dividends are paid on those shares; price growth occurs before reinvestment. Yield and price growth are independent entered assumptions.
- Dividend per share grows monthly at the entered effective annual rate. Cash dividends accumulate without interest; projected total wealth includes investments and retained cash. Income-target capital uses the initial yield, without assuming future growth.

## Inputs
- currency: Currency; default "USD"
- mode: Dividend mode; default "projection"
- principal: Starting investment; default 10000
- months: Projection months; default 12
- monthlyContribution: Monthly investment; default 0
- monthlyIncomeTarget: Monthly income target; default 1000
- dividendYield: Initial annual dividend yield (%); default 4
- dividendGrowth: Annual dividend-per-share growth (%); default 0
- priceGrowth: Annual share-price growth (%); default 0
- taxRate: Dividend tax (%); default 0
- reinvest: Buy additional shares with after-tax dividends at each month end.; default true

## Interfaces
Input schema: https://klarfort.com/tools/dividend-calculator/schema.json
Worked request and response: https://klarfort.com/tools/dividend-calculator/examples.json
Public table: https://klarfort.com/tools/dividend-calculator/table.json
JSON API: POST https://klarfort.com/tools/api/v1/dividend-calculator
MCP endpoint: POST https://klarfort.com/tools/mcp
MCP tool name: dividend-calculator

## JSON request body
```json
{
  "currency": "USD",
  "mode": "projection",
  "principal": 10000,
  "months": 12,
  "monthlyContribution": 0,
  "monthlyIncomeTarget": 1000,
  "dividendYield": 4,
  "dividendGrowth": 0,
  "priceGrowth": 0,
  "taxRate": 0,
  "reinvest": true
}
```

## Usage and credit
Free for personal, commercial and any other lawful use with credit to KlarFort at https://klarfort.com/. Third-party data terms still apply.

Computed with KlarFort Calculators, https://klarfort.com/

Place a visible credit near the reused material or in the credits for your work or integration. One clear credit per work or integration is sufficient; no separate credit per API request is required. The credit_url field contains the homepage. The citation_url field is an optional calculator reference. Full permission: https://klarfort.com/tools/docs/license/

## Sources
KlarFort calculation methodology: https://klarfort.com/tools/methodology/ (1)