1. What is the Dividend Growth Rate?

The dividend growth rate is the annualized percentage rate of growth that a stock's dividend undergoes over a period of time. It's a key metric for dividend investors evaluating the sustainability and growth potential of dividend payments.

2. How Does the Calculator Work?

The calculator uses the dividend growth rate formula:

Where:

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

Explanation: The formula calculates the percentage change between the current and previous dividend payments.

3. Importance of Dividend Growth Rate

Details: The dividend growth rate helps investors assess a company's dividend sustainability, financial health, and future income potential. Consistently growing dividends often indicate a stable, profitable company.

4. Using the Calculator

Tips: Enter both current and previous dividend amounts in USD. The previous dividend (D0) must be greater than zero for the calculation to be valid.

5. Frequently Asked Questions (FAQ)

Q1: What's a good dividend growth rate?
A: Generally, 5-10% annual growth is considered good, but this varies by industry and company maturity.

Q2: How often should I calculate dividend growth?
A: Typically calculated annually, but quarterly calculations can provide more frequent insights.

Q3: Can dividend growth be negative?
A: Yes, negative growth occurs when dividends are cut, signaling potential financial trouble.

Q4: How does this relate to dividend yield?
A: While yield shows current income, growth rate indicates future income potential.

Q5: Should I only invest in high-growth dividend stocks?
A: Not necessarily - balance between growth and yield based on your investment goals.