Methodology and model boundaries
How Income Pilot builds adividend income forecast
Income Pilot uses past dividend payments to establish a starting point for each holding. It then uses the assumptions you choose to project future income and show the estimated effects of taxes and inflation. Full Access can also explore a range of simulated outcomes. Here's how each step works and where the forecast has limits.
Forecast calculation
How does Income Pilot calculate dividend income?
Income Pilot models dividend cash flow for each holding month by month, then combines it into yearly totals. The forecast begins in the current month, so the first forecast year may contain fewer than 12 months.
- ContributionsContributions are added at the beginning of applicable months and divided among holdings using the allocation percentages you enter, which must total 100%. The website supports monthly or annual contributions. Annual contributions are applied in January, so the first forecast year may not include one when the forecast begins later in the year.
- Dividend timingTwelve Data supplies historical ex-dividend dates, not payment dates. Income Pilot estimates dividend frequency from the spacing between those ex-dividend dates, then uses frequency-based months to schedule projected dividends. These months are modeling assumptions, not predictions of actual payment dates.
- DRIP
Dividends are included in projected income whether DRIP is on or off. DRIP determines whether the model also reinvests them into additional units at the purchase price.
With DRIP on, the model reinvests the full gross dividend and sets aside no cash for tax. It estimates tax separately based on account type. After-tax results are planning estimates; reinvested dividends are not cash available to spend.
In a taxable brokerage account, reinvested dividends may still be taxable even when you did not receive cash to spend.
Inputs and market data
Where do the dividend yield and growth assumptions come from?
Historical data provides starting values; your assumptions drive the forecast.
- Data sourceIncome Pilot uses Twelve Data for security search, current prices, and historical dividend amounts and ex-dividend dates. These values provide starting inputs; Twelve Data does not supply the projected payment schedule.
- Dividend growthCalculation
Annualized growth = (ending total ÷ starting total)^(1 ÷ years used) − 1
You select a 5- or 10-year growth preference. Income Pilot compares two 12-month dividend totals: one at the start of the comparison period and one at the end. Years used is the actual comparison period in years. It may be shorter than the window you selected if history does not extend far enough back, but must be at least 36 months plus enough earlier events to form the starting 12-month total. The result is limited to a range from -100% to 200%.
FallbackIf the selected window cannot be calculated, Income Pilot uses the other available window. If neither window can be calculated, growth starts at 0%.
- Your changesProvider history supplies starting yield, historical growth, detected frequency, and asset-class values. You can review and change yield and growth before forecasting. Allocation, contributions, and DRIP are choices you enter; they are not provider-derived.
- Missing dataA 0% starting value can be a placeholder rather than a finding about the security. No usable dividend history produces 0% yield and growth; insufficient history produces 0% growth. If a current price is unavailable, the website cannot calculate yield and asks you to review it before forecasting. Provider outages are reported as errors rather than replaced with invented data.
Tax treatment
How Income Pilot estimates taxes on dividend income
Account type, residency, and the income you enter shape the after-tax estimate.
- Brokerage dividendsFederal and state tables for your filing status, residency, and estimated income shape the result, including NIIT when thresholds apply.
- REIT dividendsTreated as ordinary income with a simplified Section 199A deduction where tables support it. Return-of-capital splits are not modeled.
- IRA dividendsNo current U.S. federal, state, or NIIT tax is applied. Foreign withholding on ADR holdings may still reduce cash received.
- ADR dividendsThe forecast assumes ADR dividends qualify for preferential U.S. dividend tax treatment; it does not verify each payment's classification. Estimated foreign withholding applies when we can identify the issuer's country. Brokerage forecasts may apply a simplified foreign tax credit. Withholding is skipped when country is unknown.
- State tax nuancesThe estimate does not apply state rules that exclude part of qualified dividends from state tax.
- Future tax yearsBracket thresholds may index by forecast year; rates and NIIT thresholds stay at current-law levels. Entered taxable income stays flat across forecast years and is used as a proxy for modified adjusted gross income when estimating NIIT.
Inflation adjustment
How Income Pilot adjusts dividend income for inflation
Projected dividend income is translated into estimated purchasing power from the forecast start onward.
- Current yearPublished headline PCE data is combined with the Federal Reserve's current-year inflation projection. Month-by-month rates are estimated to align with the full-year projection.
- Near-term yearsThe next two calendar years use maintained Federal Reserve median PCE projections when available.
- Later yearsYears beyond that horizon use the Fed's longer-run inflation anchor when one is available in maintained projection data.
- Unchanged assumptionsInflation adjusts the income view only. It does not change contribution amounts, dividend yield, dividend growth, or the fixed purchase prices used in the base case.
Confidence ranges
How Income Pilot estimates income confidence
Full Access tests many possible paths around your base forecast instead of presenting one smooth line.
- What variesInflation, dividend-growth regimes, dividend freezes or cuts, recoveries, and the share price used for future contributions and DRIP reinvestment can differ by path. Profiles can reflect asset class, yield, and growth settings.
- How to read the rangeFull Access runs many what-if paths, then compares the estimated after-tax and after-inflation income. The results are sorted and shown at five reference points: a cautious low, the lower and upper edges of the likely band, the middle outcome, and an optimistic high. The low and high marks are reference points, not hard limits.
Illustration only — not to scale.
Estimated after-tax income in today's dollars
- Goal labelsThe percentage shown counts how many simulated paths meet your monthly goal at the selected year. At 80% or more: High confidence. At 45–79%: Within reach. Below 45%: Stretch goal.
Important limitations