Dividend Reinvestment Calculator (DRIP)
Model a DRIP where dividends buy more shares, compounding your income.
Please note: For information only, not investment advice. Share prices can fall as well as rise and past performance does not predict future results.
What the Dividend Reinvestment Calculator (DRIP) does
A dividend reinvestment plan uses each payout to buy more shares, which then earn dividends themselves. Combined with a growing dividend, the compounding is powerful over long horizons — the gap against taking dividends as cash widens every year.
Formula
Each year: Income = Shares × Dividend per shareNew shares = (Income + Contribution) ÷ Share priceDividend per share and share price each grow at their own rate
Inputs explained
| Input | Unit | Required | Notes |
|---|---|---|---|
| Starting shares | number | Yes | Accepts more than 0. |
| Current share price | selected currency | Yes | Accepts more than 0. |
| Annual dividend per share | selected currency | Yes | Accepts more than 0. |
| Annual dividend growth | % | Yes | — |
| Annual share price growth | % | Yes | — |
| Years | number | Yes | Accepts 1 or more, up to 60. |
| Additional annual investment | selected currency | Optional | Accepts 0 or more. |
| Currency | one of 10 options | Optional | — |
How to use it
- Choose Currency.
- Enter Starting shares, Current share price, Annual dividend per share and Annual dividend growth and 2 more.
- Optionally add Additional annual investment.
- Select Calculate.
Worked example
1,000 shares at $50 paying $2.00, 6% dividend growth, 5% price growth, over 20 years.
- Shares
- 1000
- Price
- 50
- Dividend
- 2.00
- Div growth
- 6
- Price growth
- 5
- Years
- 20
Share count grows to 2,377.29 and the portfolio reaches $315,383 — $104,733 ahead of taking the dividends as cash.
Reading the result
- "Yield on original cost" here grows faster than in the plain dividend growth calculator for the same inputs, because it compounds twice over — both the dividend per share and the share count are growing, not the dividend alone.
- The advantage-over-cash figure is a dollar amount, not a rate — it scales with position size, so it is not itself a return percentage comparable across differently-sized holdings.
Assumptions and limitations
- Reinvested dividends buy shares at the year-end price with no timing lag, transaction cost, or fractional-share restriction — some real DRIPs round to whole shares or apply purchase minimums.
- Dividend growth and price growth are modelled as two independent constant rates for the whole period, with no correlation between them, even though a company sharply raising its dividend often also sees its share price move.
Common mistakes
- Treating "final annual dividend income" as cash you would actually collect if the position were liquidated for value instead of held for income — that income only materialises if the shares are kept.
- Reading the "shares gained from reinvestment" line as free money — every one of those shares was bought with a dividend payment that, in a taxable account, was already taxed before it was reinvested.
Frequently asked questions
Is DRIP always better than taking cash?
For accumulation, usually yes. In retirement you may need the income. It also concentrates you further in one holding, which cuts against diversification.
Are reinvested dividends taxed?
In most jurisdictions yes — reinvesting does not defer the tax. Tax-sheltered accounts avoid this and get the full compounding benefit.