Dividend Reinvestment (DRIP) Calculator
Enter your holding, yearly contribution, dividend yield and price growth to see the effect of reinvesting dividends.
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Dividend Reinvestment (DRIP) Calculator by TheCalcTools
How the Dividend Reinvestment (DRIP) Calculator works
Each year the price grows by g and a dividend of the yield is paid on the year-end value. Reinvested, the holding grows by (1 + g)(1 + y) a year; taken as cash, the holding only grows with the price and the dividends pile up separately without compounding.
Contributions are added at the start of each year. Taxes on dividends and fund fees reduce real-world results.
The formula
Worked example
Using the default values shown in the calculator:
| Starting value | $20000 |
|---|---|
| Contribution each year (start of year) | $3000 |
| Dividend yield | 3 % |
| Share price growth per year | 5 % |
| Years | 20 |
- 20,000 plus 3,000 a year for 20 years, 3% yield and 5% price growth: $246,808 reinvested.
- Taking dividends as cash: $157,224 of shares plus $48,651 of dividends.
Result:
| Value with dividends reinvested | $246,808 |
|---|---|
| Value without reinvesting | $157,224 |
| Plus cash dividends received | $48,651 |
| Advantage of reinvesting | $40,933 |
| Yearly dividend income at the end (reinvested) | $7,404 |
Frequently asked questions
Are reinvested dividends taxed?
In many countries, including the US, dividends are taxable in the year they are paid even if reinvested, unless held in a tax-advantaged account.
Sources and further reading
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This calculator gives estimates for information only. It is not financial advice, and your lender's or provider's figures will govern. Rates, fees and rules vary. See our disclaimer.