Dividend Reinvestment (DRIP) Calculator
See how reinvesting dividends back into the same stock compounds your holding.
About the Dividend Reinvestment (DRIP) Calculator
Enter your starting investment, the dividend yield, how fast you expect dividends and the share price to grow, and the number of years. The calculator compares reinvesting every dividend with taking dividends as cash.
A dividend reinvestment plan (DRIP) uses each dividend to buy more shares, which then earn their own dividends. Over decades this is a large share of total stock-market returns.
The formula
Each year: new shares = dividends ÷ price; dividends and price grow at their rates
Worked example
10,000 at a 3.5% yield, dividends growing 5% and the price 4% a year, for 20 years
- Reinvested: worth about 45,237, with 2.06× the original shares
- Taken as cash: 33,484 (shares plus cash received)
- Yearly dividend income by the end: about 1,917
Things to keep in mind
- Before tax: reinvested dividends are usually taxed in the year paid.
- Assumes steady growth; real dividends and prices move unevenly and can be cut.
Questions people ask
Are reinvested dividends taxed?
Usually yes, in the year paid, as if received in cash.
Do all brokers offer DRIP?
Many US brokers do, often with fractional shares.
What is an accumulation fund?
A fund that reinvests dividends inside the fund automatically, common in the UK and Europe; the effect is the same.