Dividend Reinvestment (DRIP) Calculator
Project the long-run value of reinvesting every dividend to buy more shares, and see how much the compounding adds over simply taking the cash.
How it works
Each year: dividend paid = shares × dividend per share · new shares = dividend paid ÷ share price · final value = shares × final price
A dividend reinvestment plan (DRIP) uses each cash dividend to buy more shares, so next year’s dividend is paid on a larger share count. That extra share growth compounds on top of any price appreciation, which is why a long DRIP can end up owning many more shares than you started with. The gap over taking dividends as cash widens the longer you hold and the higher the yield.
Worked example
Start with 100 shares at $50 paying a $2 dividend that grows 5% a year, with the price rising 6% a year. After 20 years the reinvested dividends have compounded your share count well above 100, and the portfolio is worth noticeably more than if you had pocketed each dividend.
Frequently asked questions
Does a DRIP guarantee higher returns?
No. Reinvesting compounds your share count, but total return still depends on the dividend and the share price, both of which can fall. DRIP simply removes the temptation to spend the cash and automates the reinvestment.
Are reinvested dividends still taxed?
In a taxable account, yes — reinvested dividends are taxed in the year they are paid even though you never received cash, and they raise your cost basis. In a tax-advantaged account like an IRA there is no annual tax on them.
What return does this assume?
You set the dividend growth and price growth yourself. The tool applies them each year and reinvests every dividend at that year’s share price; real markets are far less smooth.
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Educational estimate, not investment advice. Returns are hypothetical and not guaranteed.