Free Tool
DRIP Calculator
See how reinvesting dividends compounds your wealth over time. Enter your investment details and watch your shares and income grow year by year.
Scenario builder
Pick a preset, or dial it in yourself. Charts update live.
Compounding curve
Nominal · Reinvested · Confidence band shows ±3% growth scenarios
Income calendar · year 20
Most US dividend stocks pay quarterly — typically Mar / Jun / Sep / Dec.
Multi-position portfolio
Mix 2-5 holdings. See how each contributes to the total.
Year-by-year breakdown
| Year | Shares | Div / share | Income | Cum. dividends | Portfolio value |
|---|---|---|---|---|---|
| 1 | 208.0000 | $2.0000 | $400 | $400 | $10,400 |
| 2 | 216.7360 | $2.1000 | $437 | $837 | $10,837 |
| 3 | 226.2941 | $2.2050 | $478 | $1,315 | $11,315 |
| 4 | 236.7726 | $2.3153 | $524 | $1,839 | $11,839 |
| 5 | 248.2845 | $2.4310 | $576 | $2,414 | $12,414 |
| 6 | 260.9598 | $2.5526 | $634 | $3,048 | $13,048 |
| 7 | 274.9482 | $2.6802 | $699 | $3,747 | $13,747 |
| 8 | 290.4234 | $2.8142 | $774 | $4,521 | $14,521 |
| 9 | 307.5869 | $2.9549 | $858 | $5,379 | $15,379 |
| 10 | 326.6737 | $3.1027 | $954 | $6,334 | $16,334 |
| 11 | 347.9583 | $3.2578 | $1,064 | $7,398 | $17,398 |
| 12 | 371.7634 | $3.4207 | $1,190 | $8,588 | $18,588 |
| 13 | 398.4688 | $3.5917 | $1,335 | $9,923 | $19,923 |
| 14 | 428.5236 | $3.7713 | $1,503 | $11,426 | $21,426 |
| 15 | 462.4615 | $3.9599 | $1,697 | $13,123 | $23,123 |
| 16 | 500.9185 | $4.1579 | $1,923 | $15,046 | $25,046 |
| 17 | 544.6562 | $4.3657 | $2,187 | $17,233 | $27,233 |
| 18 | 594.5907 | $4.5840 | $2,497 | $19,730 | $29,730 |
| 19 | 651.8288 | $4.8132 | $2,862 | $22,591 | $32,591 |
| 20 | 717.7144 | $5.0539 | $3,294 | $25,886 | $35,886 |
How this calculator works
Enter your initial investment, current share price, annual dividend yield, and an optional dividend growth rate. The calculator assumes dividends are paid and reinvested once per year at the prevailing share price. Each year, the dividend per share grows by your specified growth rate, and all dividends are used to purchase fractional shares at the original share price. The year-by-year table shows exactly how your share count, dividend income, and total portfolio value evolve.
Why reinvesting dividends matters
Without reinvestment, your dividend income stays flat (or grows only with dividend raises). With DRIP, each dividend payment buys more shares, which produce more dividends the next period. This compounding effect is one of the most powerful forces in long-term investing. Studies have shown that reinvested dividends account for a significant portion of total stock market returns over multi-decade periods.
Understanding the results
- Final Portfolio Value — The total value of all accumulated shares at the end of the time period.
- Total Dividends Earned — The sum of every dividend payment received across the entire period, all of which was reinvested.
- Total Shares — Your original shares plus every fractional share purchased through reinvestment.
- Effective Yield on Cost— The final year's dividend income divided by your original investment. This shows how much your yield has grown through compounding and dividend increases.
Worked example: $10,000 at a 4% yield for 20 years
Suppose you invest $10,000 in a stock priced at $100 per share (100 shares), yielding 4% annually, with dividends growing 5% per year. The table below shows how reinvested dividends compound your share count, income, and total value at select years. Compare DRIP (bold column) against taking dividends as cash (right column).
| Year | Shares (DRIP) | Annual income (DRIP) | Total value (DRIP) | Total value (cash div) |
|---|---|---|---|---|
| 1 | 104.00 | $420 | $10,400 | $10,000 + $400 cash |
| 5 | 122.57 | $598 | $12,257 | $10,000 + $2,210 cash |
| 10 | 151.94 | $931 | $15,194 | $10,000 + $5,031 cash |
| 15 | 193.09 | $1,416 | $19,309 | $10,000 + $8,627 cash |
| 20 | 251.23 | $2,099 | $25,123 | $10,000 + $13,197 cash |
After 20 years, DRIP turns the original 100 shares into 251 shares producing $2,099 in annual income — a 21% effective yield on the original $10,000 cost. Without reinvestment, you'd have the same 100 shares plus $13,197 cash you probably spent over two decades. Numbers assume 4% starting yield, 5% dividend growth, constant $100 share price. Run your own scenario in the calculator above.
DRIP vs. non-DRIP: when each makes sense
- Use DRIP when:you're in accumulation phase, don't need current income, are investing in a tax-advantaged account (IRA / 401k), or want to avoid the timing decision of when to reinvest.
- Skip DRIP when:you live off dividend income, need to rebalance across multiple positions, want to redirect payouts into a different holding, or are in a concentrated position you don't want to add to.
Tax considerations
Reinvested dividends are still taxable in the year paidif held in a regular brokerage account, even though you receive no cash. Qualified dividends are taxed at long-term capital gains rates (0%, 15%, or 20% in the US depending on income). REIT and some foreign dividends are usually non-qualified and taxed as ordinary income. Holding DRIP-heavy positions in a Roth IRA or 401(k) eliminates this drag entirely. Check with a tax advisor for your situation.
Frequently asked questions
What is a DRIP and how does it work?
A DRIP (Dividend Reinvestment Plan) automatically uses each dividend payment to buy more shares of the same stock instead of paying you cash. Over time, this creates a compounding effect: the new shares earn their own dividends, which buy still more shares. Most major brokerages and many companies offer DRIPs for free, and many allow fractional share purchases.
How is DRIP growth calculated in this calculator?
Each year, the calculator computes the annual dividend per share (starting yield × initial price, then grown by your dividend growth rate each year), multiplies by your current share count, and uses the full dividend payment to buy additional shares at the initial share price. The new share count carries into the next year, and the process repeats. This is the standard DRIP compounding model.
Is DRIP a good strategy?
For long-term investors who don't need current income, DRIPs can meaningfully boost returns by forcing reinvestment and eliminating timing decisions. Studies of long-horizon S&P 500 returns show reinvested dividends account for 40%+ of total return. The trade-off is that DRIPs still generate taxable dividend income in a taxable account, even though you receive no cash.
Does DRIP avoid taxes?
No. In a taxable brokerage account, reinvested dividends are taxed the same year they are paid, even though you never receive cash. The reinvestment just means the tax bill comes out of pocket rather than from the dividend. In tax-advantaged accounts like a Roth IRA or 401(k), DRIP dividends grow tax-free or tax-deferred.
What's the difference between a DRIP calculator and a dividend yield calculator?
A dividend yield calculator shows a single snapshot: what you earn today based on current price and dividend. A DRIP calculator is dynamic — it projects year-by-year how reinvested dividends compound your share count, income, and total value over a multi-year horizon.
Related tools
- Dividend Yield Calculator — one-year snapshot of dividend income
- Dividend Growth Calculator — project income growth without the reinvestment effect
- FIRE Calculator — combine everything into a retirement timeline
- Free Dividend Tracker App — run DRIP projections on your real connected portfolio