Dividend Snowball Calculator
See how many years of reinvesting and adding to a dividend portfolio it takes to reach a target annual dividend income.
How it works
Each year: dividends = portfolio × yield × (1 + growth)^year · portfolio = portfolio + dividends + new investment · repeat until dividends ≥ target
A dividend snowball compounds two forces at once: you reinvest every payout to buy more shares, and each share raises its own dividend over time. Early on the payouts are small, but reinvested dividends and fresh contributions keep buying more income-producing shares, and dividend growth lifts the payout on everything you already own. The result accelerates — the snowball rolls faster the larger it gets — until the annual income reaches the level you want to live on.
Worked example
Starting with $25,000 at a 3.5% yield growing 6% a year, adding $6,000 annually: dividends begin near $875. Reinvestment plus contributions and payout growth compound the portfolio, and annual dividend income crosses a $20,000 target in roughly 20 years, on a portfolio worth several hundred thousand dollars.
Frequently asked questions
What is a dividend snowball?
It is the strategy of reinvesting all dividends so each payout buys more shares, which pay more dividends. Combined with dividend growth and regular contributions, the income compounds and snowballs toward a target you can live on.
Does dividend growth really matter?
A great deal. A payout growing 6% a year doubles roughly every 12 years, so even without new money the income you receive keeps climbing. Growth is what separates a snowball from a static yield.
Should I reinvest forever?
Reinvest during accumulation to compound fastest. Once your dividend income meets your spending needs, you can switch to taking the payouts as cash instead of reinvesting them.
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Educational estimate, not financial advice. Investment returns are not guaranteed.