What is sustainable dividend growth rate (SGR)?

Sustainable Dividend Growth Rate (SGR) is the maximum rate at which a company can grow its dividend without deteriorating its financial health or requiring external financing. Formula: SGR = ROE × Retention Ratio, where Retention Ratio = 1 − Payout Ratio. For example, a company with ROE of 18% and payout ratio of 45% has a retention ratio of 55% and an SGR of 18% × 0.55 = 9.9% per year. If the company grows dividends faster than this rate, the payout ratio must expand — which is unsustainable long-term.

What happens when dividend growth exceeds the sustainable rate?

When a company grows its dividend faster than its SGR, one of two things must happen: the payout ratio expands (consuming a higher share of earnings each year) or additional equity is issued to fund the gap. Neither is sustainable indefinitely. Eventually the company must either slow dividend growth to the SGR level, freeze the dividend, or cut it. Monitoring the gap between actual DGR and SGR is an early warning system for dividend cuts.

How is the dividend safety score calculated?

The safety score is 0–100 across five weighted components: EPS coverage of the dividend (25 points — coverage above 3× earns full score), FCF coverage (25 points — free cash flow coverage above 3× earns full score), balance sheet debt-to-equity (20 points — D/E below 0.3 earns full score), consecutive years of dividend payments (15 points — 50+ years earns full score), and ROE quality (15 points — ROE above 25% earns full score). Scores of 85+ are Excellent, 70+ are Good, 50+ are Moderate, 30+ are Weak, and below 30 is Danger.

How does the sustainable DDM valuation work?

The sustainable DDM uses the Gordon Growth Model with the SGR instead of the actual DGR: Intrinsic Value = D1 / (r − SGR), where D1 = D0 × (1 + SGR) and r is the required return. This produces a more conservative valuation than using the actual historical DGR, because it assumes the company can only sustain dividend growth at the rate supported by its ROE and retention ratio. An optional two-stage version applies the actual DGR for a transition period before converging to the SGR.

Is this sustainable dividend growth calculator free?

Yes. The Sustainable Dividend Growth Calculator Pro on StockToolHub is completely free with no registration, account, or subscription required. All five tabs — SGR Calculator, Safety Score, Growth Projection, Valuation, and Compare — are fully accessible.

Sustainable Dividend Growth Calculator Pro — SGR, Safety Score, Projection, Valuation & Compare

Company Fundamentals

Stock / Ticker optional

Return on Equity (ROE)

Net Income / Shareholders' Equity × 100

Dividend Payout Ratio

DPS / EPS × 100 — auto-calculates retention ratio

Dividend Data

Current Annual Div

Actual DGR (5yr)

%/yr

EPS (TTM)

FCF Per Share opt

Sustainable Dividend Growth Rate

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Enter ROE and payout ratio to calculate

Retention Ratio (b)

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Actual DGR (5yr)

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SGR vs Actual Gap

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Sustainability Status

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EPS Coverage

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FCF Coverage

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SGR vs Actual DGR vs Payout Ratio

Ticker	ROE (%)	Payout (%)	Actual DGR (%)	EPS ($)	DPS ($)	SGR (%)	Actual vs SGR	EPS Coverage	Sustainability

Most Sustainable Dividend

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Companies

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Sustainable (Actual ≤ SGR)

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Avg SGR

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At Risk (Actual > SGR)

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SGR vs Actual DGR by Company

What each tab calculates

SGR Calculator

Calculates the maximum sustainable dividend growth rate using the formula SGR = ROE × Retention Ratio. Compares SGR against actual 5-year DGR to flag whether the dividend is growing faster than the business can support, with EPS and FCF coverage and an automated sustainability verdict.

Safety Score

Scores dividend safety on a 100-point scale across five weighted components: EPS coverage (25 pts), FCF coverage (25 pts), balance sheet strength (20 pts), dividend streak (15 pts), and ROE quality (15 pts). Grades from Excellent to Danger with visual component bars.

Growth Projection

Projects the forward dividend at both the sustainable growth rate and the actual historical DGR over any time horizon. Shows where the two paths diverge, projected yield on cost, and annual income under each scenario for any share count.

Valuation

Estimates intrinsic value using the Gordon Growth Model at both the SGR and actual DGR, with an optional transition period. Compares results against market price to compute margin of safety under each growth assumption.

Compare

Side-by-side comparison of SGR, actual DGR, payout, and EPS coverage across up to 8 companies. Identifies which dividends are growing within their sustainable range and which are outpacing the business — with a grouped bar chart.