Dividend Income Calculator
How much income your portfolio throws off today, how it compounds with dividend growth and reinvestment (DRIP), and what you actually keep after tax, using the Canadian eligible-dividend gross-up and dividend tax credit.
Rates & rules verified · July 2026Primary sources: CRA – Tax rates and income brackets · Revenu Québec – Income tax rates
Dividend income by year
Annual dividend income, reinvesting (DRIP) vs taking the cash.
Portfolio value by year
How the holdings grow, price appreciation, plus reinvested dividends when DRIP is on.
Year-by-year projection
Dividend income, yield on cost, after-tax income, and portfolio value each year.
| Year | Dividend income | Yield on cost | After-tax | Portfolio value |
|---|
How this is calculated
Dividend income and growth
Year-0 income is simply portfolio value × yield. Each year, the dividend per dollar invested grows relative to the share price: it scales by (1 + dividend growth) ÷ (1 + price growth). If dividends grow faster than the price, the yield on your holdings drifts up over time. Income each year is value × current yield.
DRIP (dividend reinvestment)
With reinvestment on, the portfolio grows by both price appreciation and the dividends bought back as shares: value → value × (1 + price growth) + dividends. Those new shares pay their own dividends, so income compounds. With DRIP off, only price growth applies and the cash is paid out to you.
Yield on cost
Yield on cost = this year's dividend income ÷ original investment. Unlike the stated yield (based on today's price), yield on cost climbs as a company raises its dividend, the payoff of holding growing dividend payers for the long run.
Eligible-dividend gross-up and tax credit (2026)
Canadian eligible dividends are grossed up by 38% to a taxable amount, then reduced by a dividend tax credit: a federal credit of 15.0198% of the grossed-up amount plus a provincial credit (10% in Ontario, 12% in BC, and so on). The effective rate shown is (tax(other income + $1,000 of dividends) − tax(other income)) ÷ $1,000, computed on your combined federal + provincial brackets after the basic personal amount, Ontario surtax and health premium, and the Quebec abatement where they apply. It's an estimate, it ignores CPP/EI, OAS clawback, the alternative minimum tax, and other credits.
Why low-income retirees can pay ~0% (or negative)
Because the 38% gross-up is offset by the combined dividend tax credit and your basic personal amount, a retiree with little other income can receive substantial eligible dividends and pay close to nothing. At very low incomes the effective rate can even go negative, the dividend tax credit spills over and shelters a bit of other income too. That is real, and this tool shows it rather than flooring at zero.
What this doesn't model
Dividend cuts, non-eligible (small-business) dividends, foreign-dividend withholding tax, currency effects, fund fees, sequence-of-returns risk, and reinvestment inside registered accounts (TFSA/RRSP dividends are tax-free or tax-deferred, so the tax panel applies to non-registered holdings). Remember a dividend is not free money, the price drops by roughly the payout on the ex-dividend date, so judge holdings by total return, not yield alone. For the full income-tax picture see the income tax calculator, and for realized gains the capital gains calculator.
Common questions
How are Canadian eligible dividends taxed in 2026?
Eligible dividends (from most Canadian public companies) are grossed up by 38% to a taxable amount, then a dividend tax credit reduces the tax: a federal credit of 15.0198% of the grossed-up dividend plus a provincial credit that varies by province. Because the gross-up-and-credit system approximates the corporate tax already paid, the effective personal rate on eligible dividends is far lower than on regular income at the same bracket.
Can I pay zero tax on dividends in Canada?
Yes. A low-income Canadian retiree with little or no other income can receive tens of thousands of dollars of eligible dividends and pay roughly 0%, or even a negative effective rate, because the basic personal amount plus the dividend tax credit can fully offset the tax on the grossed-up amount. This is why eligible Canadian dividends are one of the most tax-efficient forms of income in a non-registered account.
What is a DRIP and how does it grow dividend income?
A DRIP (dividend reinvestment plan) automatically reinvests each dividend to buy more shares instead of paying cash. Those extra shares pay their own dividends, so with a DRIP your income compounds: the portfolio grows by both share-price appreciation and reinvested dividends, and dividend income rises faster than with cash payouts.
What is yield on cost?
Yield on cost is this year's dividend income divided by the amount you originally invested, not the current market value. If a company keeps raising its dividend, your yield on cost climbs over time even though the stated yield on the current price stays roughly constant, a $10,000 investment yielding 3.5% today might pay 8% or more of the original cost after 15–20 years of dividend growth.
Are dividends better than total return?
Not necessarily. A dividend is not free money, the share price drops by roughly the dividend on the ex-dividend date. What matters for building wealth is total return (price growth plus dividends), and a high yield can signal a struggling company. Dividends are useful for predictable cash flow and Canadian tax efficiency, but they should be judged as part of total return, not chased on their own.