1. What is Dividend Growth Rate?

The Dividend Growth Rate (GR) measures the percentage increase in dividends paid by a company from one period to the next. It's a key metric for investors evaluating dividend-paying stocks and assessing a company's financial health and growth potential.

2. How Does the Calculator Work?

The calculator uses the Dividend Growth Rate formula:

Where:

• \( Current\ Dividend \) — Most recent dividend payment
• \( Previous\ Dividend \) — Dividend payment from the prior period

Explanation: The formula calculates the percentage change between two consecutive dividend payments, showing how much the dividend has grown (or shrunk) over time.

3. Importance of Dividend Growth Rate

Details: A consistent, positive dividend growth rate indicates a company's ability to increase shareholder returns over time. It's particularly important for income investors who rely on growing dividend payments to maintain purchasing power against inflation.

4. Using the Calculator

Tips: Enter both current and previous dividend amounts in the same currency. The amounts should be the per-share dividend values. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What's considered a good dividend growth rate?
A: This varies by industry, but generally 5-10% annual growth is considered strong. Rates higher than 10% may be unsustainable long-term.

Q2: How often should I calculate dividend growth rate?
A: Most investors track it annually, but quarterly tracking can provide more timely insights for companies that pay dividends more frequently.

Q3: What does a negative growth rate indicate?
A: A negative rate means dividends decreased from the previous period, which could signal financial difficulties or a strategic shift in capital allocation.

Q4: Should I use nominal or inflation-adjusted dividends?
A: For real growth assessment, inflation-adjusted values are better. For comparing to company-reported figures, use nominal values.

Q5: How does this relate to dividend yield?
A: While yield shows current income relative to price, growth rate shows how that income is increasing over time. Both metrics are important for dividend investors.