Tax drag from dividends compounds over decades in taxable space, and dividend investors often underestimate that drag. Compare two investments with two different dividend yields using the calculator below.
Dividend Yield Tax Drag Calculator
See how dividend yield quietly erodes after-tax compounding over time, and how much it costs in terminal wealth.
MetricInvestment AInvestment B
Cumulative Tax Gap
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Investment A Investment B
After-tax growth comparison for Investment A and Investment B.
Assumes 100% qualified dividends, zero capital gains distributions, and federal rates only. State income taxes not included. Identical pretax returns assumed for both investments — actual results will vary. Chart y-axis uses a logarithmic scale; equal vertical distances represent equal percentage growth, which makes the compounding gap between the two lines visually consistent across the full time horizon. This tool is for illustrative purposes only and does not constitute tax or investment advice.
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