Dividend Reinvestment Calculator
See how reinvesting dividends compounds a stock or fund position. Enter your shares, the share price, dividend yield and expected growth, and compare the value, share count and yearly income with dividend reinvestment against taking the dividends as cash.
Buys shares at the end of each year in both scenarios.
How to use the Dividend Reinvestment Calculator
- Enter your position: number of shares and the current share price (or switch to a starting amount).
- Enter the dividend yield and how often dividends are paid.
- Set growth assumptions: yearly dividend growth and share price growth.
- Add optional extras: a yearly contribution and a tax rate on dividends.
- Compare the results: value with DRIP vs without, shares owned and income, then check the chart and yearly table.
How dividend reinvestment compounds
Each time a dividend is paid, a DRIP turns it into more shares:
new shares = shares held × dividend per share × (1 − tax rate) ÷ share price
Those extra shares receive the next dividend too, so the share count grows every period. Over long periods the share count growth, the dividend growth and the price growth all multiply together. Without reinvestment the share count stays fixed and the dividends simply pile up as cash.
This calculator uses: dividend per share in year t = starting price × yield × (1 + dividend growth)t−1, paid in equal parts each period, and share price at time t = starting price × (1 + price growth)t.
Example: 100 shares at $50, 4% yield, paid quarterly
Assuming 5% yearly dividend growth, 5% yearly price growth and no taxes or contributions (rounded):
| After | Share price | Shares with DRIP | Value with DRIP | Value without DRIP (incl. cash) |
|---|---|---|---|---|
| 5 years | $63.81 | 121.3 | $7,740 | $7,487 |
| 10 years | $81.44 | 147.1 | $11,983 | $10,660 |
| 20 years | $132.66 | 216.5 | $28,719 | $19,880 |
| 30 years | $216.10 | 318.5 | $68,827 | $34,897 |
The gap widens with time: in the early years reinvesting adds little, but after a few decades the extra shares produce a large share of the value and income. Real results depend on actual dividends, prices and taxes, which change from year to year.
Frequently asked questions
What is a DRIP?
A dividend reinvestment plan (DRIP) automatically uses each cash dividend to buy more shares of the same stock or fund, often including fractional shares. Those new shares earn dividends too, so the share count and income compound over time.
How does this calculator model reinvestment?
Each payment period, the dividend per share (yield × starting price, grown by the dividend growth rate each year) is paid on all shares held. With DRIP, the dividend after tax buys shares at that period's price. Without DRIP, the dividends are kept as cash with no interest. The share price grows smoothly at the price growth rate.
Why does dividend yield change over time in the projection?
The yield on the current price changes when dividend growth and price growth differ. If dividends grow faster than the price, the yield rises; if the price grows faster, it falls. Yield on cost compares the latest yearly dividend income with the total amount you invested.
Does reinvesting dividends avoid taxes?
Usually not. In most taxable accounts, reinvested dividends are taxed in the year they are paid, just like cash dividends. Enter a dividend tax rate to reduce the amount reinvested; in tax-advantaged retirement accounts you can leave it at 0%.
What is the difference between with and without reinvestment?
Without reinvestment you still collect every dividend as cash, so the comparison includes that cash in the total. The difference shown is the extra value created purely by buying more shares with dividends and letting them grow and pay dividends too.
Are the results guaranteed?
No. The projection uses constant growth rates you choose. Real dividends can be cut, prices move up and down, and the order of returns matters. Use it to understand the effect of compounding, not as a forecast.