Current yield uses current price; yield on cost uses original unit acquisition cost. Neither is total return, and a rising yield caused by a falling price is not evidence of improving income or safety. Entered sector comparisons are illustrative assumptions, not current market averages or allocation advice.
Why Dividend Yield Alone Is Not Enough
Payout ratio is annual DPS / positive EPS. It is undefined for missing, zero or negative EPS. EPS alone cannot establish dividend safety: cash flow, debt, distribution classification and company policy matter. The calculator provides no safety score or dividend-cut prediction.
Yield on Cost: The Metric That Rewards Patience
Current yield uses current price; yield on cost uses original unit acquisition cost. Neither is total return, and a rising yield caused by a falling price is not evidence of improving income or safety. Entered sector comparisons are illustrative assumptions, not current market averages or allocation advice.
The Power of DRIP: Compounding Shares Over Time
Additional assumptions: 20 years, 5% annual price growth, zero contributions, taxes and fees. Quarterly DRIP at the modeled price gives 216.474964 shares and $28,718.63 market value. Next-year annual income at the final DPS is $1,148.75 versus $530.66 for 100 unreinvested shares. Cash dividends paid during year 20 differ from that forward annual rate; no outcome is guaranteed.
Sector Allocation for Dividend Portfolios
Current yield uses current price; yield on cost uses original unit acquisition cost. Neither is total return, and a rising yield caused by a falling price is not evidence of improving income or safety. Entered sector comparisons are illustrative assumptions, not current market averages or allocation advice.
Tax Efficiency: Qualified vs. Ordinary Dividends
Simplified US single-filer 2026 marginal bracket illustration. Eligibility, income stacking, NIIT and state tax are not determined; use Entered rate for your own assumption.