Dividend growth refers to the increase in the amount of dividends paid by a company over time. This growth is an important indicator of a company's financial health and its ability to generate profits.
It is also an important metric for investors to assess the potential for future returns, as companies with strong dividend growth in the past are often considered stable, well-established investments.
Using a simple calculation, we provide a forecast of future dividends so you can check what dividends you might expect in the future.
Basically, the calculation is as follows:
Total dividends from last year * (1 + growth rate (optimistic, pessimistic or average)) ^ number of years = total
Since this is of course very theoretical, here is an example with real numbers.
Total dividends from last year: €100
Optimistic return: 15%
Pessimistic return: 5%
Average return: 10%
Number of years: 10 years
€100 * (1 + 15%) ^ 10 years = €404.56
In case of an optimistic return of 15% per year on the dividends, after 10 years we would receive a dividend of €404.56 per year.
You can find this option directly in our web app in the dividend component. It has the title "Forecast".
