Free Financial Tool
DRIP Calculator
See how dividend reinvestment compounds your shares over time. Compare DRIP ON vs. DRIP OFF to quantify the reinvestment advantage.
DRIP (Reinvest Dividends)
ON = dividends buy more shares · OFF = dividends paid as cash
Final Portfolio Value (DRIP ON)
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Final Shares
Total Dividends
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Total Return
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CAGR
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Annual Income at End
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DRIP Advantage vs. Cash
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DRIP ON vs. DRIP OFF — Portfolio Value Over Time
Year-by-Year Breakdown
| Year | Shares | Price | Div/Share | Total Div | Value |
|---|
How the DRIP Calculator Works
Each year, the share price appreciates and dividends are paid. With DRIP ON, those dividends buy additional shares at the current price — which then generate their own dividends the next year.
// Each year:
price = price × (1 + priceGrowth)
divPerShare = divPerShare × (1 + divGrowth)
totalDiv = shares × divPerShare
if DRIP: shares += totalDiv / price
shares += monthlyAddShares × 12
value = shares × price
Worked Example
100 shares at $50, 3% yield, 5% price growth, 5% dividend growth, 20 years:
- Initial value: $5,000
- DRIP ON after 20 years: ≈ $21,500 (330% return)
- DRIP OFF after 20 years: ≈ $13,266 + $4,800 cash dividends
- DRIP advantage: ~$3,400 more portfolio value from compounding reinvestment
Frequently Asked Questions
What is a DRIP (Dividend Reinvestment Plan)?▾
A DRIP automatically reinvests dividend payments to purchase additional shares of the same stock or fund. Instead of receiving cash, you receive fractional shares. Over time, this compounding of shares — and the dividends those new shares generate — can dramatically increase total returns.
How much does DRIP investing improve returns?▾
Historically, dividend reinvestment has accounted for roughly 40% of total S&P 500 returns. For a stock with 3% yield and 5% price appreciation, DRIP vs. no DRIP over 20 years can make the difference between 163% and 214% total return on a $10,000 investment.
What is dividend yield?▾
Dividend yield = annual dividend per share / current share price × 100%. A $50 stock paying $1.50/year has a 3% yield. High-yield dividend stocks (5%+) often offer less price appreciation, while low-yield stocks (1–2%) may have higher growth. Total return = price appreciation + dividend yield.
Should I reinvest dividends or take cash?▾
Reinvest if you don't need the income now — compounding additional shares accelerates long-term wealth. Take cash if you're in the income phase of retirement and need the cash flow, or if you want to rebalance into other investments.
What is dividend growth investing?▾
Dividend growth investing focuses on companies that consistently increase their dividends every year (e.g., Dividend Aristocrats). A 5% dividend growth rate means your yield on original cost (YOC) rises each year, providing inflation-beating income growth over a long holding period.
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Example Scenarios — See the Real Numbers