Calculator

Monthly income target calculator

Work backward from the monthly income you want and see how much capital the plan might require after tax. This view also estimates how long it may take to reach that target.

Use this for planning only. Dividend cuts, taxes, inflation, and FX can change real outcomes.

Use this as a planning calculator, not as a guarantee. Taxes, cuts, and FX can move the real outcome.
Net yield after tax
3.25%
Gross yield reduced by your withholding assumption.
Capital needed
£369,231
Required to produce £12,000 per year net.
20-position portfolio target
£18,462
Rough per-position capital if you spread the income plan across 20 holdings.
Years to target
15 years
Based on current capital, annual saving, and expected total return.

Planning summary

Annual income target
£12,000
Current benchmark market
FTSE 100
Base market yield
3.25%

Higher-yield markets can reduce the capital required, but the tradeoff is often more concentration risk, tax complexity, or weaker dividend stability. Use this page to compare what feels realistic for your target lifestyle.

How to estimate the portfolio needed for monthly dividend income

This calculator works backward from an income goal. Instead of asking what a portfolio might pay, it asks how large the portfolio may need to be under a chosen yield and tax assumption.

Core calculation

required capital ≈ annual target income ÷ net dividend yield

Inputs that matter

  • Monthly income target is converted to an annual income requirement.
  • Expected dividend yield determines how much gross income each unit of capital is assumed to produce.
  • Tax or withholding assumptions reduce gross yield to an estimated net yield.
  • Savings and growth assumptions affect any modeled estimate of how long it may take to reach the target.

How to interpret the result

  • Treat the required-capital number as a planning range, not a minimum guarantee.
  • Lower assumed yields usually require more capital but may avoid relying on unusually high-yield securities.
  • A sustainable plan should consider diversification and dividend safety instead of optimizing only for the smallest required portfolio.

Worked example

A target of $1,000 per month is $12,000 per year. At a hypothetical 4% net dividend yield, the simple capital requirement is about $300,000 before considering dividend growth, inflation, fees, or changes in payout rates.

Important limitations

  • Dividend yield changes with both price and distribution policy.
  • Taxes and withholding depend on residency, account type, treaty treatment, and the security itself.
  • Inflation can reduce the purchasing power of a fixed income target over time.
  • A high-yield portfolio can carry greater dividend-cut or concentration risk.

Related research

Retire on dividends calculator · Dividend tax drag calculator · Dividend yield · Dividend safety