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DRIP Calculator
Reinvested dividends buy shares that pay dividends of their own. This DRIP calculator shows where that leads — compare reinvesting against taking the cash, and watch your share count and yield on cost climb. One link shares the exact scenario.
See how this works on a $5,000 dividend holding — 3 real examples
Portfolio value after 20 years, reinvesting dividends
$0
Reinvesting adds$0 versus taking every dividend as cash.
Total dividends
$0
Final shares
0
Annual dividend income
$0
Yield on cost
0%
How your share count grows
Year-by-year dividend & share scheduledividends, shares and value each year
| Year | Shares | Price | Dividends | Portfolio value |
|---|
How your reinvested-dividend growth is calculated
Each year is split into m payment periods (12 for monthly, 4 for quarterly). The price and the dividend per share both grow every period at their annual rates converted to a per-period factor:
price step = (1 + priceGrowth)1/m · dividend step = (1 + divGrowth)1/m
In period t your shares pay shares × (annualDividend/m) × stept−1. That payment is reduced by your dividend tax rate as a flat drag, and — in the DRIP path — the after-tax amount buys afterTaxDividend / pricet more shares, which themselves pay dividends next period. Any contribution per period buys shares in both paths so the comparison isolates the reinvestment effect.
The cash figure takes every dividend as after-tax cash instead of reinvesting, so its shares only grow from your contributions: its final value is shares × endPrice + accumulated cash. Yield on cost is the final annual dividend income divided by your original cost (starting shares × starting price), not by later contributions — so it reflects the income yield on money you put in at the start. Growth rates are assumptions you set, not forecasts; real dividends and prices vary year to year.
One hundred shares, left to compound
100 shares at $50 — $5,000 — paying $2 a share, dividend growing 5% a year, price up 6%. What reinvesting does over ten and twenty years.
Every dividend buys more shares
after 20 years$32,807
- The share count climbs from 100 to 204.59 without a single new dollar deposited.
- Taking the dividends as cash instead ends at $22,772 — reinvesting adds $10,036.
- By year 20 the position pays $1,086 a year, a 21.71% yield on the original $5,000.
The later years do the heavy lifting: shares bought early spend two decades paying dividends.
Load this example (opens in a new tab)The same holding, half the runway
after 10 years$13,026
- Ten years in, reinvesting has grown 100 shares into 145.47.
- The cash-out path ends at $11,517, leaving reinvestment $1,509 ahead so far.
- Yield on cost has reached 9.48%, more than double the 4% a new buyer gets today.
Half the time earns well under half the reward — most of the gap arrives late.
Load this example (opens in a new tab)The same DRIP inside a taxable account
after 20 years$29,479
- Skimming 15% off each payment before it reinvests ends the run at $29,479.
- That is $3,328 behind the untaxed account — the drag compounds along with the shares.
- The share count stops at 183.83 instead of 204.59, and yield on cost at 19.51%.
Where the shares live matters: the same stock grows differently in an IRA than in a brokerage.
Load this example (opens in a new tab)Illustrations only, not financial advice. Your own rate, taxes and insurance will differ — check with a qualified financial advisor before acting on any of this.
Reinvesting dividends, in plain English
- A DRIP compounds your shares. Each dividend buys more shares, and those shares pay their own dividends — the engine behind long-run dividend compounding.
- Reinvest vs cash is the key choice. Reinvesting maximizes growth; taking cash gives you income today but freezes your share count. The two bars above show the dollar gap.
- Yield on cost rises with dividend growth. A 4% starting yield growing 5–8% a year quietly becomes a much larger yield on what you originally paid.
- Price growth cuts both ways. Higher prices grow your portfolio but mean each reinvested dividend buys fewer new shares.
- Taxes matter in a taxable account. Reinvested dividends are usually taxed the year you receive them; the tax-rate drag models that. It is zero in an IRA or Roth.
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Frequently asked questions
How does a dividend reinvestment calculator show compounding?
Every dividend payment automatically buys more shares, and those new shares earn their own dividends next period. This dividend compounding snowballs: in the default scenario above, reinvesting instead of pocketing the cash meaningfully widens the final portfolio value over 20 years, and the share-count chart shows exactly where the extra shares come from.
DRIP vs taking dividends as cash — which is better?
It depends on whether you need the income now. Reinvesting (a DRIP) maximizes long-run growth because dividends keep buying shares; taking cash gives you spendable income but freezes your share count. This calculator shows both outcomes side by side so you can see the exact dollar gap reinvesting produces for your inputs.
What is yield on cost?
Yield on cost is your current annual dividend income divided by what you originally paid, expressed as a percent. As the dividend per share grows over the years, your yield on cost climbs well above the yield a new buyer would get today — one of the quiet rewards of holding a growing dividend payer.
Are reinvested dividends taxable?
In a taxable brokerage account, reinvested dividends are generally taxed in the year you receive them even though you never took the cash. Enter your effective dividend tax rate above to model the after-tax drag; in a Roth or traditional IRA you would typically leave it at 0%. This is a flat-rate estimate, not tax advice.
What is the difference between dividend yield and dividend growth?
Yield is current income relative to price (a $2 dividend on a $50 share is a 4% yield). Dividend growth is the annual rate at which the dividend per share itself rises. A modest yield that grows 6–8% a year can out-earn a higher static yield over a long horizon — try both dividend inputs above to compare.
How much of long-term stock returns come from dividends?
Historically, reinvested dividends have contributed a large share of total equity returns — often a third or more over multi-decade horizons. That is the case for treating dividend reinvestment as a core part of a total-return plan rather than an afterthought.
Disclaimer: these calculators are educational tools, not financial advice. They model your inputs with published formulas, but they cannot know your full situation — for decisions with real stakes, talk to a qualified professional. Formulas and defaults last reviewed .