The Joshua Kennon-Green Dividend Modeling Tool

ADENEI = Annual Dividends Exceed Net Equity Investment

CAGR = Compound Annual Growth Rate

If applicable, the table will include a yellow shaded line highlighting the year in which the Cumulative Dividend Income exceeded the Market Value of Investment ($) for the first time, representing the point at which more than 100% of the initial outlay has been returned in the form of cash.

If you entered an Optional Treasury Comparison, the table will include a green shaded line highlighting the year in which the Cumulative Dividend Income exceeded the Cumulative Treasury Income for the first time, if applicable.

This Dividend Modeling Tool is provided as-is with no guarantee, warranty, or assurance of any kind. By using it or any output it has generated, it is your responsibility to independently verify any calculations and assumptions.

Dividend Modeling Tool – Methodology Overview

1. Foundational Values. You specify any two of Number of Shares, Price per Share, and Market Value of Investment. The third value is derived algebraically (Market Value = Shares × Price per Share). All subsequent calculations treat this Market Value as the initial equity amount.
2. Initial Dividend Inputs. You specify either the Initial Dividend Rate Per Annum (Per Share, $) or the Initial Dividend Yield (Per Annum) (%) on the initial Market Value. If dividend per share is entered, the initial yield is calculated as (Dividend per Share × Shares) ÷ Market Value. If yield is entered, dividend per share is calculated as (Yield × Market Value) ÷ Shares. Exactly one of these inputs must be left blank; the tool solves for the missing one.
3. Dividend Growth Path (Years 1–30). You enter four constant annual growth rates for Years 1–5, 6–10, 11–20, and 21–30. Dividend per share is grown multiplicatively year over year using the rate appropriate to each year. Annual Dividend Income for a year is (Dividend per Share in that year) × (Number of Shares) as of that year (which may change if reinvestment is enabled).
4. Dividend Yield Path and Market Value Estimates (Base, No Reinvestment). The initial dividend yield is treated as the Year 1 yield; the Estimated Dividend Yield at Year 30 is treated as the Year 30 yield. For intermediate years, the “Assumed Dividend Yield at End of Year” is calculated by linear interpolation between these two points. In the no-reinvestment case, the Projected Market Value at Assumed Dividend Yield in a given year is Annual Dividend Income (on the original share count) ÷ Assumed Dividend Yield for that year. Projected Ending Value (no reinvestment) is defined as Projected Market Value at Assumed Dividend Yield + Cumulative Dividend Income (all dividends assumed to be taken as cash).
5. Cumulative Measures and Net Equity Investment. Cumulative Dividend Income is the running total of all annual dividends through a given year. Cumulative Dividends as a % of Initial Market Value is (Cumulative Dividend Income ÷ Initial Market Value) × 100. Net Equity Investment is modeled as Initial Market Value – Cumulative Dividend Income (i.e., original equity less all gross dividends received over time, regardless of how they are modeled in the reinvestment case). “Annual Dividend as % of Net Equity Investment” uses this Net Equity Investment as the denominator. When Net Equity Investment becomes zero or negative, the table displays “ADENEI” (Annual Dividends Exceed Net Equity Investment) instead of a percentage.
6. Optional Treasury Comparison. If you enter an Assumed Yield on the 30-Year Treasury, the tool computes Treasury Income Per Annum as Initial Market Value × Treasury Yield. Cumulative Treasury Income is Treasury Income Per Annum × Year Number, and Cumulative Treasury Income as % of Initial Market Value is (Cumulative Treasury Income ÷ Initial Market Value) × 100. The first year in which Cumulative Dividend Income exceeds Cumulative Treasury Income within the 30-year horizon is highlighted (if applicable).
7. Year 30 CAGR (Assuming No Dividend Reinvestment). In the non-reinvestment path, Initial Market Value is treated as the starting value, and the Year 30 non-reinvestment Projected Ending Value (Projected Market Value at the Year-30 Assumed Yield on the original shares + Cumulative Dividends by Year 30) is treated as the ending value. The “Year 30 CAGR (Assuming No Dividend Reinvestment)” is calculated as (Ending Value ÷ Initial Market Value)^(1/30) – 1.
8. Dividend Reinvestment Path and IRR (With Assumed Dividend Reinvestment). If the “Assume Dividends Are Reinvested at the then-annual dividend yield” option is enabled, each year’s dividend is treated as being reinvested into the same asset at that year’s implied price (derived from the dividend per share and the Assumed Dividend Yield at End of Year). This increases the share count, so future dividends are paid on a larger base. The “Total Market Value of Reinvested Dividends” column reports, for each year, the difference between the total Projected Market Value at Assumed Dividend Yield (with reinvestment) and the no-reinvestment market value path for the original shares. At Year 30, the total wealth under this reinvestment scenario is the Year-30 Projected Market Value at Assumed Dividend Yield (which already incorporates all reinvested dividends). The “Internal Rate of Return (IRR) – With Assumed Dividend Reinvestment” is calculated on a cash-flow stream with an initial outflow equal to Initial Market Value and a single terminal inflow equal to that reinvestment-adjusted ending market value (intermediate dividends are assumed to be reinvested and therefore do not appear as separate cash flows).
9. Global Assumptions and Limitations. The tool provides two paths: a non-reinvestment path (dividends taken as cash) and, if elected, a reinvestment path that assumes dividends are reinvested into the same asset at modeled year-end market values and yields. In both cases, the model ignores taxes, fees, transaction costs, the exact intra-year timing of dividend payments, and any market dynamics beyond the user-specified growth rates and yield path. All results are hypothetical and highly sensitive to the input assumptions; they are not predictions, guarantees, or investment advice.

Illustrative Example – Altria Group and Why the Reported Year 30 CAGR Can Be Below the Starting Yield

To demonstrate how this calculator is not necessarily intuitive to non-financial experts, imagine a user entered Altria Group as the investment in the "Foundational Parameters" section using facts from 11/15/2025, presuming a $100,000.00 "Market Value of Investment ($)" and "Price per Share ($)" of $58.19. Upon pressing "Calculate Foundational Values" the calculator would return 1,718.51 as "Number of Shares".

Moving to the next section – "Dividend Parameters" – imagine the user then put in $4.24 as "Initial Dividend Rate Per Annum (Per Share, $)", left "Initial Dividend Yield (Per Annum) (%)" blank, and entered 4.00% for all four "Assumed Dividend Growth Rate (Per Annum, %)" periods, then entered 7.29% as the "Estimated Dividend Yield at Year 30 (%)". The user did not check, "Assume Dividends Are Reinvested at the then-annual dividend yield".

Upon pressing "Calculate Dividend Projections", the "Initial Dividend Yield (Per Annum) (%)" is calculated as 7.29% in the "Dividend Parameters" section, the "Summary of Inputs and Derived Values" is generated as well as the table titled, "Per Annum Dividend Analysis Based Upon Inputted Assumptions (Years 1–30)".

Within the "Summary of Inputs and Derived Values" section the user would see, "Year 30 CAGR (Assuming No Dividend Reinvestment): 6.80%". This might, at first glance, appear to be an error – the initial annual dividend yield is 7.29% and the Year 30 dividend yield is also 7.29%, while the dividend itself is assumed to grow at 4.00% per annum. It can therefore be tempting to conclude that the reported 6.80% Year 30 CAGR must be wrong. It is not. It is a function of the methodology; the "Year 30 CAGR (Assuming No Dividend Reinvestment)" metric is not an Internal Rate of Return (IRR).

1. What the tool is doing with these inputs
In this Altria illustration:
• Initial Market Value = $100,000
• Price per Share = $58.19 → Number of Shares ≈ 100,000 ÷ 58.19 ≈ 1,718.51
• Initial Dividend per Share = $4.24 → Initial Annual Dividend ≈ 1,718.51 × 4.24 ≈ $7,286.50
• Initial Dividend Yield ≈ 7,286.50 ÷ 100,000 ≈ 7.29%

The user then sets a 4.00% per annum dividend growth rate for all four periods and an Estimated Dividend Yield at Year 30 of 7.29%. Because the starting and ending yields are equal, the modeled "Assumed Dividend Yield at End of Year" is flat at 7.29% across all 30 years. Dividend per share is grown at 4% per year, so price per share also grows at 4% per year (given a constant yield, price is proportional to dividend).

That implies, ignoring rounding:
• Market Value in year t ≈ 100,000 × 1.04^t−1
• Annual Dividend Income in year t ≈ 7,286.50 × 1.04^t−1

The calculator’s "Projected Ending Value (Projected Market Value at Assumed Dividend Yield + Cumulative Dividend Income)" for year 30 is then:
  Year-30 Market Value (based on the original number of shares and the Year-30 price implied by the yield path)
+ Cumulative dividends received over 30 years.

For the specific Altria scenario described, this produces a Projected Ending Value of approximately $720,376.57. The reported "Year 30 CAGR (Assuming No Dividend Reinvestment)" is then calculated as:
  CAGR = (Ending Value ÷ Initial Market Value)^1/30 − 1
  = (720,376.57 ÷ 100,000)^1/30 − 1 ≈ 6.80%

2. Why the 6.80% CAGR can be less than the 7.29% yield
The key point is that the "Year 30 CAGR (Assuming No Dividend Reinvestment)" is not measuring an IRR or a true total-return time series. It collapses all 30 years of dividends plus the final market value into a single future value, then asks: “At what constant annual rate would $100,000 have to grow for 30 years to reach $720,376.57?”

In this metric, dividends do not compound; they are treated as if they were set aside in cash until the end of the 30-year horizon and only then added to the final market value. Earlier cash flows therefore do not earn any return inside this particular CAGR measure. As a result, it is entirely possible – and in this case, expected – that the reported 30-year CAGR is below the current yield.

A simple two-year approximation illustrates the phenomenon. Suppose an investor:
• Invests $100,000 today,
• Receives $10,000 at the end of year 1 and $10,000 at the end of year 2,
• And ends with the original $100,000 principal returned at the end of year 2.

The internal rate of return (IRR) on this stream is greater than 10%, because $10,000 is received each year, plus all capital is recovered. However, if the ending value is defined as 100,000 + 10,000 + 10,000 = 120,000 and "CAGR" is defined as:
  (120,000 ÷ 100,000)^1/2 − 1 ≈ 9.54%,
then this "CAGR" is less than the 10% cash yield, even though economically the investment generated a double-digit total return. The divergence arises solely from the decision to treat all cash flows as if they were realized at the end of the period when computing the CAGR.

3. How to see a total-return style figure inside the tool
The calculator provides two distinct perspectives:
• A non-reinvestment path, where dividends are taken as cash and the "Year 30 CAGR (Assuming No Dividend Reinvestment)" is based on ending value = market value of the original shares + all dividends accumulated as a lump sum.
• A reinvestment path, where dividends are assumed to be reinvested into the same asset at the modeled yields, increasing the share count and allowing dividends to compound.

In addition, the Summary includes explicit Internal Rate of Return (IRR) figures for both paths:
• "Internal Rate of Return (IRR) – No Dividend Reinvestment" is calculated on the cash-flow stream consisting of an initial outflow equal to the initial market value, annual dividends as positive cash flows, and the terminal sale of the original shares at Year 30.
• "Internal Rate of Return (IRR) – With Assumed Dividend Reinvestment" is calculated on an initial outflow equal to the initial market value and a single terminal inflow equal to the Year-30 market value of all shares held under full reinvestment (intermediate dividends are assumed to be reinvested and therefore do not appear as separate cash flows).

4. Is the calculator fundamentally broken in this Altria scenario?
No. In the Altria example above, the reported 6.80% "Year 30 CAGR (Assuming No Dividend Reinvestment)" is internally consistent with the methodology: it is the geometric average rate that takes the initial $100,000 to the final $720,376.57 under the convention that ending value is defined as market value plus the sum of all dividends over the 30-year period. The apparent discrepancy arises from comparing this convention-driven CAGR figure to the intuitive expectation formed from the starting yield and dividend growth, which are more naturally associated with an IRR or reinvested total-return view. The specific definition used in Version 1.00 treats the "Year 30 CAGR (Assuming No Dividend Reinvestment)" as (ending value ÷ initial value)^1/30 − 1, where ending value is market value plus the sum of all cash flows over the horizon.

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