Dividend Reinvestment Calculator
How a holding grows when every dividend buys more shares (DRIP) against taking the dividends as cash: shares, value and income year by year at the growth rates you choose.
Result…
How it's calculated
Price after m months = price now × (1 + price growth)^(m ÷ 12) Dividend per share in year y = dividend now × (1 + dividend growth)^(y − 1) Each payment = shares × yearly dividend ÷ payments a year × (1 − tax) Reinvested: shares += payment ÷ price that month As cash: cash += payment; value = shares × price + cash
A dividend reinvestment plan (DRIP) uses each dividend to buy more shares instead of paying it out. The new shares earn dividends of their own, so the share count, the income and the value compound. This page follows a holding month by month: the price grows at the rate you choose, the dividend per share rises once a year at its own rate, each dividend either buys shares at that month's price or is kept as cash, and an optional monthly contribution buys shares in both cases. It shows the shares, value and income for every year and the gap between the two routes. The dividend yield you enter sets the first year's dividend; the growth rates are assumptions for you to change, not forecasts.
Your numbers, step by step
About the Dividend Reinvestment calculator
This dividend reinvestment calculator compares two ways of holding a dividend-paying share or fund: reinvesting every dividend to buy more shares (a DRIP) or taking the dividends as cash. Enter what you invest, the share price, today's dividend yield, how fast you assume the dividend and the price will grow, how many years to look ahead and how often dividends are paid. You can add a monthly contribution and a tax rate on dividends. It follows the holding month by month and shows the shares, value and income for each year, the gap between the two routes and a chart of both. The growth rates are your own assumptions, not forecasts, so try a few to see how much the result depends on them. To work out the yield itself, use the dividend yield calculator.
How to use it
- Enter the “Starting investment”, the “Share price now” and the “Dividend yield now”.
- Set the “Dividend growth a year” and the “Share price growth a year” you want to assume.
- Choose the “Years” and how often “Dividends paid”.
- Optionally add a “Monthly contribution” and a “Tax on dividends”, then compare the two values and the yearly steps.
Worked example
Invest 15,000 in a share priced at 40 with a 3.5% dividend yield paid quarterly, and add 150 a month for 25 years. Assuming the dividend grows 5% a year and the price 4% a year, reinvesting every dividend ends with 2,290.59 shares worth 244,253.71, paying 10,037.11 in the last year. Taking the dividends as cash instead ends with 173,777.39 including the cash collected, so reinvesting comes out 70,476.32 ahead. In both cases you put in 60,000.
Updated
Questions people ask
How does dividend reinvestment work?
Each dividend is used to buy more shares of the same holding instead of being paid to you. Those new shares then earn dividends too, so the number of shares and the income grow on themselves.
What is the formula for DRIP growth?
At each payment, the shares held times the dividend per payment is divided by that month's price to give the new shares. Repeat for every payment, with the dividend and price growing at the rates you set.
Is a DRIP always better than taking cash?
Only if the shares do at least as well as what you would do with the cash. Reinvesting buys more of the same holding, which adds to your exposure to it if its price falls.
What is a common mistake when projecting dividend growth?
Assuming today's high growth rate lasts for decades. Small changes in the dividend growth or price growth rate make a big difference over 20 years or more, so try lower rates too.
Does this include tax and fees?
Only a flat tax rate on dividends if you enter one. Fees, capital gains tax and whole-share rules are left out, and tax depends on your country and account. This is an illustration; a qualified financial adviser can help with your plans.