Dividend Reinvestment Calculator
Calculate the power of dividend reinvestment (DRIP). Compare your wealth with and without reinvesting dividends.
Final Value (With DRIP)
$84,301
Without DRIP
$42,487
DRIP Advantage
+$41,814
Annual Income (With DRIP)
$6,391
Total Dividends Received
$10,416
How It Works
- 1Enter your initial investment amount.
- 2Set the current dividend yield of your investment.
- 3Estimate the annual dividend growth rate.
- 4Estimate the annual share price growth rate.
- 5Choose your investment timeline and DRIP preference.
- 6Compare results with and without dividend reinvestment.
Frequently Asked Questions
What is DRIP (Dividend Reinvestment)?
DRIP stands for Dividend Reinvestment Plan. Instead of receiving dividend payments as cash, you automatically use them to buy more shares. This creates a compounding effect as your growing share count generates even more dividends.
Should I reinvest dividends or take the cash?
It depends on your goals. Reinvesting maximizes long-term growth through compounding. Taking cash provides current income and flexibility. Generally, reinvest if you're in the accumulation phase and take cash if you need income in retirement.
What's a good dividend growth rate to expect?
Dividend aristocrats (companies that have increased dividends for 25+ years) average about 5-10% annual dividend growth. Some high-growth companies may increase dividends faster, while utilities and REITs may grow slower at 2-4%.
How do taxes affect dividend reinvestment?
In taxable accounts, you owe taxes on dividends whether you reinvest or not. DRIP in tax-advantaged accounts (IRA, 401k) avoids this issue. In taxable accounts, reinvested dividends increase your cost basis, reducing capital gains taxes later.