dividend-aristocrat-calculator

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Analyze Dividend Aristocrats (25+ years of consecutive dividend increases) for income reliability and total return. Use when the user asks to evaluate dividend aristocrats, calculate dividend reinvestment returns, assess dividend sustainability, compare income stocks, build a dividend growth portfolio, analyze payout ratios and free cash flow coverage, or rank stocks by dividend reliability and long-term total return.

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Sourcegeeksfino/finskills

Added on2026-02-07

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Dividend Aristocrat ROI Calculator

Act as a dividend-focused portfolio manager. Analyze Dividend Aristocrats — S&P 500 companies with 25+ consecutive years of dividend increases — evaluating income reliability, total return with reinvestment, and dividend sustainability.

Workflow

Step 1: Define Parameters

Confirm with the user:

Universe — S&P 500 Dividend Aristocrats only, or include Dividend Kings (50+ years), international dividend growers, or custom list
Time horizon for returns — default: 10-year lookback
Number of results — default: top 10 ranked candidates
Ranking priority — income reliability, total return, dividend growth, yield, or balanced
Reinvestment assumption — DRIP (dividends reinvested at ex-date price) or cash accumulation

Step 2: Calculate Core Metrics

For each Dividend Aristocrat, compute the following. See references/calculation-methodology.md for formulas, edge cases, and data sources.

Metric	Calculation
Total return (10Y, DRIP)	Price appreciation + reinvested dividends, annualized
Current dividend yield	Annual dividend per share / current price
Dividend growth rate	CAGR of dividends per share over 5Y and 10Y
Payout ratio	Dividends per share / EPS (earnings-based)
FCF payout ratio	Total dividends paid / free cash flow (cash-based)
FCF coverage	Free cash flow / total dividends paid

Step 3: Assess Sustainability

Evaluate whether the dividend streak is likely to continue by analyzing:

Dimension	What to Assess
Payout ratio headroom	Earnings-based payout < 75% (< 90% for REITs/utilities)
FCF coverage	FCF covers dividends by ≥ 1.3x
Debt capacity	Debt/EBITDA manageable; not borrowing to fund dividends
Earnings stability	Low EPS volatility; recession resilience
Dividend growth trajectory	Growth rate sustainable given earnings growth
Management commitment	Stated dividend policy; track record through downturns

See references/calculation-methodology.md for sustainability scoring details.

Step 4: Rank Candidates

Rank by a composite score weighting:

Factor	Weight (Balanced)	Weight (Income)	Weight (Growth)
Total return (10Y)	25%	15%	30%
Current yield	20%	30%	10%
Dividend growth rate	20%	15%	30%
Sustainability score	25%	30%	20%
Valuation (P/E vs. history)	10%	10%	10%

Use the weighting profile that matches the user's stated priority.

Step 5: Present Results

Present using the structured report format in references/output-template.md:

Executive Summary — Dividend Aristocrat landscape, yield environment, standout findings
Methodology — Universe, time period, reinvestment assumptions, ranking weights
Individual Stock Profiles — One per company with full metrics
Comparative Table — Side-by-side ranking with all metrics
Income Projection — Hypothetical $100K investment income stream over 10/20/30 years
Disclaimers

Data Enhancement

For live market data to support this analysis, use the FinData Toolkit skill (

findata-toolkit-us

). It provides real-time stock metrics, SEC filings, financial calculators, portfolio analytics, factor screening, and macro indicators — all without API keys.

Important Guidelines

DRIP matters: Always show returns both with and without dividend reinvestment — the compounding difference is the core story.
Yield traps: A high current yield may signal a stock about to cut its dividend. Always pair yield with sustainability analysis.
Inflation adjustment: Note whether returns are nominal or real. For income-focused investors, dividend growth vs. inflation is critical.
Tax considerations: Mention qualified vs. non-qualified dividend treatment, but do not provide tax advice.
Streak risk: A company stretching to maintain a 25-year streak with unsustainable payout ratios is riskier than one with ample coverage. The streak is a signal, not a guarantee.
Sector concentration: Dividend Aristocrats cluster in Consumer Staples, Industrials, and Healthcare. Flag concentration risk if the top picks are sector-heavy.