Portfolio size needed to generate a target monthly dividend income.

To draw 2,000 a month in dividends at a 4% yield you need a 600,000 portfolio. At 3% yield the number becomes 800,000 — not because your target rose, but because lower-yielding portfolios require more capital to produce the same income. Yield assumption drives everything.

How to use it

Enter the monthly income you want from dividends and the average yield across your portfolio. Realistic yields: 2-3% for high-quality dividend-growth stocks, 3-4% for broad dividend ETFs, 4-6% for higher-yield dividend funds (carries more risk).

What the result means

Primary is portfolio value needed. Secondary shows annual income target and the implied annual return. The tool does not assume any principal growth — if dividends rise with inflation and you don't touch principal, the income grows too, but the value calculation is based on today's yield only.

Risks of chasing yield

High-yield portfolios are usually riskier: higher-yielding stocks have more dividend cuts, and high-yield funds often hold credit-risky bonds or leveraged positions. A 'safer' 3% yield with 3% dividend growth often beats a 'stretchy' 6% yield with no growth over a 15-20 year horizon.

Quick example

With monthly dividend target of 2,000 and portfolio yield of 4%, the result is 600,000.00. Change any figure and watch the output shift — it's often more useful to see the pattern than to memorise the formula.

Which inputs matter most

You enter Monthly Dividend Target and Portfolio Yield. Not every input has equal weight. Flip one at a time toward extreme values to feel which ones move the needle most for your situation.

What's happening under the hood

Portfolio value equals annualised target divided by yield as a decimal. Assumes yield stays constant; in practice dividends rise over time with retained earnings and inflation, so the real required capital may be lower. Does not model dividend cuts or special distributions. The formula is listed in full below. If the number looks off, you can retrace the calculation by hand — that's the point of showing the working.

Using this well

Treat the output as one point on a wider map. Run it three times — a pessimistic case, a central case, and a stretch case — and plan against the pessimistic one. That habit alone separates people who stick with an investment plan from those who bail at the first wobble.

What this doesn't capture

Steady-rate math ignores real-world volatility. Actual returns are lumpy; sequence-of-returns risk matters most in drawdown; fees and taxes drag on compound growth; and behaviour changes in drawdowns can reduce outcomes below the projection. Treat the number as one scenario, not a forecast.