Dividend Reinvestment Calculator (DRIP)
Calculate how dividend reinvestment compounds your portfolio value over time. Compare DRIP vs. taking dividends as cash, model dividend growth rates, and see your projected income in future years.
Investment Details
$10,000
Starting shares: 200.0
$2,400/year
Dividend & Growth Rates
DRIP Portfolio Value in 20 Years
vs. $141,577 taking dividends as cash
DRIP Advantage
$25,818
Advantage %
+18.2%
Annual Div. Income (Yr 20)
$6,738
Total Shares
1,261.78
DRIP vs. Cash Dividends Growth
Year-by-Year Milestones
| Year | DRIP Value | Cash Value | Ann. Dividend |
|---|---|---|---|
| 2 | $16,697 | $16,816 | $495 |
| 4 | $24,556 | $24,651 | $781 |
| 6 | $33,796 | $33,625 | $1,128 |
| 8 | $44,679 | $43,871 | $1,547 |
| 10 | $57,520 | $55,534 | $2,054 |
| 12 | $72,698 | $68,781 | $2,668 |
| 14 | $90,667 | $83,793 | $3,412 |
| 16 | $111,975 | $100,774 | $4,314 |
| 18 | $137,284 | $119,951 | $5,408 |
| 20 | $167,395 | $141,577 | $6,738 |
A DRIP (Dividend Reinvestment Plan) calculator models the compounding effect of automatically reinvesting dividend payments to purchase additional shares. Instead of taking dividends as cash, reinvested dividends buy more shares that generate their own future dividends — creating an accelerating compounding cycle that significantly outperforms a cash-dividend approach over time.
Formula:
DRIP Value = (Shares × Dividend/Share × Growth Rate) reinvested annually at current priceEach year, dividend income (adjusted for growth rate and tax) buys additional shares at the current (appreciated) price. Those new shares generate dividends next year, which buy more shares — the classic dividend snowball effect.
- 1
Enter your initial investment amount and current share price to set starting share count
- 2
Set your dividend yield (annual dividend per share ÷ share price × 100)
- 3
Enter the annual dividend growth rate — Dividend Aristocrats typically grow dividends 5–10%/year
- 4
Set annual share price appreciation (total return minus dividend component)
- 5
Add a monthly contribution to model ongoing DCA investing alongside DRIP
- 6
Adjust the dividend tax rate (0% in Roth/IRA, 15% or 20% in taxable account)
- 7
Compare the DRIP value vs. cash dividend value over your chosen time horizon
- Over 20+ years, DRIP portfolios can be 50-100% larger than equivalent portfolios that take dividends as cash
- Dividend growth compounds your income stream — a 3.5% yield growing at 7%/year doubles your income in ~10 years
- Automatic reinvestment removes the temptation to spend dividend income rather than reinvest it
- Many brokerages offer commission-free DRIP and even fractional share reinvestment for all dividend amounts
- •Hold DRIP investments in a Roth IRA to eliminate dividend taxes and maximize tax-free compounding
- •Prioritize dividend growth rate over raw yield — a 2% yield growing at 8%/year beats a static 5% yield in 15+ years
- •Use DRIP alongside Dollar Cost Averaging (DCA) with regular monthly contributions for maximum compounding
- •Reinvest dividends from diversified ETFs (SCHD, VYM, VIG) rather than individual stocks to reduce single-stock risk
- •Track your 'yield on cost' — as dividends grow, your effective yield on your original investment grows substantially
Compound Interest Calculator
Model pure compound growth without dividends
Try Calculator →Dollar Cost Averaging Calculator
Model regular investment contributions over time
Try Calculator →Retirement Savings Calculator
Project total retirement portfolio with DRIP strategy
Try Calculator →Portfolio Rebalancing Calculator
Maintain target allocations as DRIP grows positions
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Frequently Asked Questions
What is DRIP investing?
DRIP stands for Dividend Reinvestment Plan. Instead of receiving dividend payments as cash, you automatically reinvest them to purchase additional shares. Over time, this creates a compounding effect: more shares generate more dividends, which buy even more shares — accelerating wealth growth significantly.
How much more does DRIP grow vs. taking dividends as cash?
The advantage of DRIP depends on your dividend yield, growth rate, and time horizon. Over 20-30 years, DRIP portfolios can end up worth 40-80% more than equivalent cash-dividend portfolios, because reinvested dividends buy shares that generate their own future dividends.
Are reinvested dividends taxable?
Yes — in a taxable brokerage account, reinvested dividends are still considered taxable income in the year they're paid, even though you didn't receive cash. Qualified dividends are taxed at favorable long-term capital gains rates (0%, 15%, or 20%). In a Roth IRA or 401(k), dividends compound tax-free.
What is dividend growth rate and why does it matter?
Dividend growth rate is the annualized rate at which a company increases its dividend payout per share. Companies with long records of dividend growth (Dividend Aristocrats) often grow dividends 5-10% annually. A higher dividend growth rate means your income stream grows significantly faster than inflation over time.
What stocks or ETFs are best for DRIP investing?
Dividend Aristocrats (S&P 500 companies with 25+ years of consecutive dividend increases), dividend ETFs like VYM, SCHD, or DVY, and high-yield REITs are popular DRIP vehicles. The best choice depends on your balance between current income and dividend growth.