How does PADI work?
PADI stands for Projected Annual Dividend Income. It represents the projected annual dividend income of a portfolio and provides an indication of how much dividend income can be expected over the coming year based on current holdings and expected dividend payments.
What is PADI?
PADI is an estimate of total annual dividend income, calculated based on:
- The number of securities held
- The expected annual dividend per security
- Current dividend policies and historical dividend payments
Within PDT, the most recently known dividend data is used. If future dividend payments are not yet available, they are estimated based on historical dividend data (up to 10 years). This provides a realistic estimate of the dividend income a portfolio may generate over the next year.
Why is PADI useful?
PADI provides a clear overview of how much dividend income a portfolio can generate annually. This is useful for:
- Income planning – for example when dividends are used as (supplementary) income
- Tracking growth over time – monitoring PADI shows whether dividend income is increasing or decreasing
- Portfolio decisions – purchases, sales, or dividend changes directly affect PADI
How do we calculate your PADI?
Your PADI is based on your current securities. For each security in your portfolio, we look at the expected annual dividend and the number of securities you hold. We then add those amounts together.
PADI = Σ (number of securities × expected annual dividend per security)
| Number of securities | The number of each security you hold in your portfolio |
|---|---|
| Expected annual dividend per security | Based on the latest known dividend data, or an estimate based on historical data |
The expected annual dividend is based on historical patterns. Future dividend cuts or increases that are not yet known are not included.
PADI growth
PADI growth shows how much the total annual dividend income of a portfolio is growing. It is calculated using the CAGR method.
PADI growth takes into account:
- Dividend increases or decreases
- Changes in the number of securities held
- Purchases and sales within the portfolio
Example:
If PADI increases from €1,000 to €1,500 in one year, the PADI growth is 50%. PADI growth therefore reflects how quickly passive dividend income is growing across the entire portfolio.
Dividend growth
Dividend growth shows how much the dividend per security has grown per year. This is also calculated using the CAGR method, but without taking the number of securities held into account.
Dividend growth focuses solely on:
- The development of the dividend per share or security
- The dividend policy of individual companies
Example:
If a company’s dividend increases from €2 to €3 per security in one year, the dividend growth is 50%.
Dividend growth therefore reflects the quality and growth strength of the dividend itself, independent of portfolio size.
At portfolio level, we calculate dividend growth as a weighted average, based on the portfolio value of each security at the end of the selected period. This means that securities in which you hold a larger position have more influence on the total dividend growth than smaller positions.
Securities that do not pay dividends are also included in the calculation with a dividend growth of 0%. This means that a large position in a non-paying security will pull the portfolio dividend growth down, even if your other securities show strong dividend growth.