Dividend investing focuses on stocks that pay out a portion of profits directly to shareholders. Reinvesting those payments — rather than spending them — lets your dividend income itself start compounding.
Yield vs. dividend growth
A stock's dividend yield is today's payout relative to its price. Dividend growth is how much that payout tends to increase each year. A modest yield with strong, consistent growth can outperform a high yield that never grows — this calculator lets you model both.
The power of reinvestment
Each dividend you reinvest buys more shares, which then earn their own dividends next year. Over long periods, reinvested dividends can make up a large share of total stock market returns.