How much dividend income will an investment pay?
Dividend income for a year is the amount invested multiplied by the dividend yield. A holding of $50,000 yielding 4% pays $2,000 a year, which is $167 a month on average or $500 each quarter. For a single stock the same figure comes from shares times the yearly dividend per share.
This dividend calculator does that sum, then answers the three questions that follow it. What does the holding look like in later years, with the dividends reinvested or paid out? How much of the income is left after tax, given the account it sits in? And for a non-registered account, what do the gross-up and the federal and provincial dividend tax credits do to the bill in each province? The yield and both growth rates are inputs: the defaults are examples, never forecasts.
How do you use this dividend calculator?
- Choose how to enter the holding. Use amount invested and dividend yield for an ETF or a whole portfolio. Use shares, share price and dividend per share for one stock.
- Pick how often dividends are paid. Most Canadian stocks pay quarterly; many dividend ETFs pay monthly.
- Set the years and the reinvestment switch. On means every payment buys more shares (a DRIP). Off means the dividends are paid out as cash.
- Choose the account type. TFSA, RRSP or non-registered. Province and other income only appear for a non-registered account, because that is the only place dividends are taxed each year.
- Enter the province and other taxable income for the year. Use income before tax, not counting these dividends, and say whether it is mainly employment income.
- Open “Growth assumptions” to change the defaults. Dividend growth, share price growth, and whether the tax is paid out of the dividends before reinvesting.
The four result cards show the first-year dividend income, the after-tax amount, the value at the end, and the income in the last year.
What does a worked example look like?
Take $50,000 in a non-registered account in Ontario, yielding 4%, paid quarterly and reinvested for 20 years, with dividend growth and share price growth of 3% a year each and $70,000 of employment income.
| Result | Amount | How it is worked out |
|---|---|---|
| Dividends in year 1, before reinvestment | $2,000 | amount invested times yield |
| Average month and each payment | $167 and $500 | twelve months, four quarterly payments |
| Dividends in year 1 with quarterly reinvestment | $2,030 | later payments are paid on more shares |
| Tax on the year-1 dividends | $152 | 7.6% of the cash received |
| Value after 10 years | $99,324 | paying $3,765 a year |
| Value after 20 years | $197,305 | paying $7,479 a year |
| Year-20 dividends against the first amount | 15% | yield on the original $50,000 |
Most of that end value comes from the growth inputs. With dividend growth and price growth both set to zero, the same holding ends at $110,836. Flip those two inputs before trusting any long projection.
What is the dividend tax credit?
The dividend tax credit is a non-refundable credit that lowers the income tax on dividends from taxable Canadian corporations held outside a registered account. It exists because the company already paid corporate tax on the profit before paying it out. The return handles it in two steps: a gross-up that raises the dividend to an estimate of the pre-tax profit, then a credit for the corporate tax assumed to have been paid.
For eligible dividends, which is what most publicly traded Canadian companies pay, the CRA’s instruction for line 12000 is to multiply the actual amount by 138%. The federal credit on line 40425 is 15.0198% of that taxable amount. Each province and territory then applies its own rate to the same taxable amount:
How to read this table: each rate applies to the taxable (grossed-up) amount of eligible dividends, on top of the federal credit. Rates are from the latest CRA worksheets and Revenu Québec's line-by-line help; Quebec publishes its credit as a share of the actual dividend, shown here converted to the same basis.
| Province or territory | Credit, share of the taxable amount | Where it is claimed |
|---|---|---|
| Alberta | 8.12% | Worksheet AB428 |
| British Columbia | 12% | Worksheet BC428 |
| Manitoba | 8% | Worksheet MB428 |
| New Brunswick | 14% | Worksheet NB428 |
| Newfoundland and Labrador | 6.3% | Worksheet NL428 |
| Northwest Territories | 11.5% | Worksheet NT428 |
| Nova Scotia | 8.85% | Worksheet NS428 |
| Nunavut | 5.51% | Worksheet NU428 |
| Ontario | 10% | Worksheet ON428 |
| Prince Edward Island | 10.5% | Worksheet PE428 |
| Quebec | 11.7% | TP-1 line 415 |
| Saskatchewan | 11% | Worksheet SK428 |
| Yukon | 12.02% | Worksheet YT428 |
Source: Lines 12000 and 12010 – Taxable amount of dividends from taxable Canadian corporations — Canada.ca; Line 40425 – Federal dividend tax credit — Canada.ca; Federal Worksheet (2025), line 40425 federal dividend tax credit (PDF) — Canada.ca; Form ON428, Ontario Tax (2025), Part C — surtax is worked out before the dividend tax credit (PDF) — Canada.ca; Worksheet NL428, Newfoundland and Labrador (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet PE428, Prince Edward Island (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet NS428, Nova Scotia (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet NB428, New Brunswick (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet ON428, Ontario (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet MB428, Manitoba (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet SK428, Saskatchewan (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet AB428, Alberta (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet BC428, British Columbia (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet YT428, Yukon (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet NT428, Northwest Territories (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Worksheet NU428, Nunavut (2025), line 61520 dividend tax credit (PDF) — Canada.ca; Line 415 – Dividend tax credit (income tax return line-by-line help) — Revenu Québec; Line 128 – Taxable amount of dividends from taxable Canadian corporations (lines 166 and 167) — Revenu Québec. In effect from January 1, 2025; checked October 11, 2026.
A higher provincial credit rate does not by itself mean lower tax, because provincial bracket rates differ too. What matters is the bracket rate on the grossed-up amount minus the credit. Here is the Ontario worked example from above, line by line:
| Step | Amount | How it is worked out |
|---|---|---|
| Actual dividends received | $2,000 | cash paid in the year |
| Taxable amount (line 12000) | $2,760 | includes a gross-up of $760 |
| Federal tax on the taxable amount | $565.80 | bracket rate at this income |
| Federal dividend tax credit | −$414.55 | line 40425 |
| Ontario tax on the taxable amount | $252.54 | bracket rate at this income |
| Ontario dividend tax credit | −$276.00 | line 61520 |
| Ontario Health Premium | $23.75 | premium bands use taxable income |
| Tax on the dividends | $151.54 | 7.58% of the cash received |
| The same amount as interest | $593 | no gross-up, no credit |
The Ontario credit is larger than the Ontario tax on these dividends, and the difference comes off Ontario tax on the salary. The health premium line shows the catch in the gross-up: it raised taxable income by $760 more than the cash received, enough to cross a premium band. The same thing happens with OAS recovery tax, the age amount and other income-tested amounts, which use the grossed-up figure.
How much tax do you pay on eligible dividends at different incomes?
Tax on eligible dividends ranges from less than zero at modest incomes to more than a third of the dividend at high incomes. The table uses $2,000 of eligible dividends in Ontario on top of different amounts of employment income, at 2026 rates.
| Other income | Tax on the dividends | Rate on the dividends | Tax on the same amount of interest |
|---|---|---|---|
| $30,000 | −$165 | −8.2% | $381 |
| $50,000 | −$165 | −8.2% | $381 |
| $70,000 | $152 | 7.6% | $593 |
| $100,000 | $178 | 8.9% | $630 |
| $150,000 | $533 | 26.7% | $882 |
| $250,000 | $685 | 34.2% | $996 |
How to read this table: a negative figure means the two credits are worth more than the tax on the grossed-up dividends, so the dividends lower the tax on the salary. That only works while there is other tax to reduce. With no other income, the credits bring tax to zero and the rest goes unused. The alternative minimum tax is a separate calculation on CRA Form T691 that leaves out the gross-up and does not allow the dividend tax credit; the calculator does not model it, and it mostly matters when a high income also includes large capital gains or deductions. The Ontario and British Columbia tax reductions for low provincial tax are not modelled either, so the saving at the lowest incomes can be overstated.
The brackets and personal credits in these tables are for 2026. The gross-up and the dividend tax credit rates are the ones printed on the 2025 tax-year forms, the latest the CRA and Revenu Québec have published; the calculator shows a note until the 2026 forms are released.
Which province taxes eligible dividends the least?
At $70,000 of employment income, British Columbia taxes $2,000 of eligible dividends the least and Newfoundland and Labrador the most. The order changes with income, which is why the calculator rebuilds this table from the reader’s own numbers.
| Province or territory | Tax on the dividends | Rate | Tax on the same amount of interest |
|---|---|---|---|
| British Columbia | $33 | 1.6% | $564 |
| Yukon | $68 | 3.4% | $590 |
| Northwest Territories | $71 | 3.6% | $582 |
| New Brunswick | $151 | 7.6% | $690 |
| Ontario | $152 | 7.6% | $593 |
| Nunavut | $192 | 9.6% | $550 |
| Saskatchewan | $193 | 9.6% | $660 |
| Alberta | $203 | 10.2% | $610 |
| Manitoba | $282 | 14.1% | $665 |
| Prince Edward Island | $320 | 16.0% | $742 |
| Quebec | $328 | 16.4% | $722 |
| Nova Scotia | $367 | 18.4% | $743 |
| Newfoundland and Labrador | $378 | 18.9% | $700 |
In every province and territory the dividends cost less than the same amount of interest. To see the full tax picture for a salary alone, the Canada income tax calculator uses the same brackets and credits.
How are dividends taxed in a TFSA, an RRSP and a non-registered account?
Dividends are taxed each year only in a non-registered account, and that is also the only place the dividend tax credit applies.
| Account | Tax in the year the dividend is paid | Dividend tax credit | Later |
|---|---|---|---|
| TFSA | None | Cannot be claimed | Withdrawals are not taxed |
| RRSP or RRIF | None while it stays in the plan | Cannot be claimed | Every withdrawal is taxed as ordinary income |
| Non-registered | Gross-up, brackets, then the credits | Federal plus provincial | A capital gain or loss when the shares are sold |
In the worked example, moving the holding from a non-registered account to a TFSA removes $152 of first-year tax, as long as the money fits the TFSA room available; the TFSA contribution limit guide explains how room builds. Inside an RRSP, Canadian dividends lose their favourable treatment altogether, because withdrawals are taxed as ordinary income. The comparison of a TFSA vs RRSP by tax rate covers the wider trade-off.
Selling shares is a separate event. A sale in a non-registered account produces a capital gain or loss, which the capital gains tax calculator estimates. Dividends from foreign companies are a third case: no gross-up, no credit, and possibly tax withheld by the other country.
How much does reinvesting dividends add?
Reinvesting dividends raises both the end value and the later income, because each payment buys shares that pay their own dividends. In the worked example the two choices finish like this after 20 years:
| Choice | Value at the end | Dividends paid out along the way | Dividend income in year 20 |
|---|---|---|---|
| Reinvest every payment | $197,305 | $0 | $7,479 |
| Take the cash | $90,306 | $53,741 | $3,507 |
| Reinvest after paying the tax from the dividends | $186,010 | about 7.6% of each payment | $7,063 |
Payment frequency matters much less. With the same yearly dividend, monthly reinvestment ends at $198,191 and once-a-year reinvestment at $193,484. A monthly payer is convenient for income, not a different return. The guide to Canadian dividend ETFs lists which funds pay monthly and which pay quarterly, and the compound interest calculator shows the same compounding effect for a fixed rate.
How much do you need invested for a target dividend income?
The amount needed is the yearly income target divided by the yield. The table shows the holding required before tax at three example yields.
| Monthly income target | At a 3% yield | At a 4% yield | At a 5% yield |
|---|---|---|---|
| $500 | $200,000 | $150,000 | $120,000 |
| $1,000 | $400,000 | $300,000 | $240,000 |
| $2,000 | $800,000 | $600,000 | $480,000 |
A higher yield shrinks the amount needed on paper, but yield is dividend divided by price, so a falling share price pushes it up. The page on high dividend stocks in Canada looks at what sits behind the largest yields.
How does the maths work?
The calculator follows these steps, in plain English:
- First-year dividends. Amount invested times yield, or shares times dividend per share. The share-based entry is converted to a value and a yield so both paths use the same engine.
- Each payment. The yearly dividend per share is split evenly across the payments in the year. The share price moves smoothly by the price growth entered; the dividend per share steps up once a year by the dividend growth entered.
- Reinvestment. With the switch on, each payment buys more shares at that date’s price, in fractions, so the next payment is paid on a larger share count. With it off, the share count never changes and the cash is totalled separately.
- Tax on eligible dividends. The first-year dividends are multiplied by 138% to get the taxable amount. The 2026 federal and provincial tax calculation runs twice, without and with that amount, including the Ontario surtax and health premium and the Quebec abatement where they apply. The federal credit and the provincial credit are subtracted, and neither can take its tax below zero.
- Comparisons. The same tax is recalculated for every province and territory and as plain interest, and the projection is rerun for each payment frequency and for the opposite reinvestment choice.
Ontario is a special case: Form ON428 works out the Ontario surtax before the dividend tax credit comes off, so the credit does not shrink the surtax. The calculator follows that order.
What are the most common mistakes with dividend estimates?
- Treating the yield as fixed. A yield is a snapshot. Companies cut dividends, and a fund’s distribution changes from year to year.
- Chasing the highest yield. An unusually high yield often reflects a fallen share price or a payout the company cannot sustain.
- Assuming a DRIP defers tax. Reinvested dividends in a non-registered account are taxed in the year they are paid.
- Applying the dividend tax credit to everything a fund pays. ETF distributions can include interest, foreign income, capital gains and return of capital. Only the eligible dividend part gets the gross-up and credit; the T3 slip shows the split.
- Forgetting the gross-up counts as income. Net income rises by the grossed-up amount, which can reduce OAS, GIS and other income-tested amounts even when the tax itself is small.
- Expecting the credit in a TFSA or RRSP. It only applies to dividends reported on the return.
- Ignoring the price. Dividend income is one part of the return; a share price that falls can outweigh years of dividends.
When should you talk to a professional?
A tax professional or a fee-only planner is worth consulting when dividends are a large share of income, when OAS or GIS is in play, when dividends come from a private corporation (those are usually other than eligible and follow different rates), when foreign dividends or split income rules are involved, or when alternative minimum tax might apply. Readers still choosing a brokerage can start with the walkthrough on how to buy ETFs in Canada.
This calculator is an educational estimate, not tax or investment advice. Dividends are not guaranteed, the projections use your own assumptions, and the T5 and T3 slips and the CRA notice of assessment are the final word on the tax.