Dividend Reinvestment (DRIP) Calculator
See how reinvesting your dividends compounds against taking them as cash — over any horizon, at any yield, in any currency.
Calculator
Reinvested vs cash
- With DRIP (reinvested)
- $58,137.02
- Without DRIP (cash)
- $40,420.68
- DRIP advantage
- $17,716.34
- Total cash dividends
- $13,887.70
What reinvesting buys you
Over 20 years a $10,000.00 stake at 4% yield and 5% price growth grows to $58,137.02 if dividends are reinvested, versus $40,420.68 if you take them as cash — a DRIP advantage of $17,716.34.
This is an illustration with constant annual yield and price growth, before tax and fees. Real dividends and share prices vary year to year.
About this calculator
A dividend reinvestment plan (DRIP) automatically uses every dividend to buy more shares instead of paying it out as cash. This calculator runs both paths side by side: it compounds your balance with reinvested dividends, then compares that against a portfolio whose price grows the same way but whose dividends are taken as cash. You set the initial investment, the annual dividend yield, the annual price growth and the number of years, in any currency. Nothing is converted between currencies — the figures are illustrative, with constant rates and no tax or fees.
How to read your results
The headline figure is your final value with dividends reinvested. The four stats break it down: the DRIP balance, the no-DRIP balance (appreciated shares plus the cash dividends you pocketed), the DRIP advantage (the difference between the two), and the total cash dividends you would have collected without reinvesting. The two bars compare the reinvested and cash outcomes visually. The longer the horizon and the higher the yield, the wider the DRIP advantage grows, because each reinvested dividend itself earns dividends in every later year.
How it's calculated
Let g be the annual price growth as a fraction (price growth / 100) and y the annual dividend yield as a fraction (yield / 100). With DRIP, the balance compounds each year by both: balance becomes balance x (1 + g) x (1 + y), repeated for the number of years. Without DRIP, only the price grows — priceBal becomes priceBal x (1 + g) each year — while the dividend is taken as cash: cash increases by priceBal x y each year. The no-DRIP final value is priceBal + cash. The DRIP advantage is the with-DRIP value minus the without-DRIP value. All money figures are rounded to two decimal places, with constant rates and no tax or fees.
Worked example
Initial 10,000, dividend yield 4%, price growth 5%, held 20 years.
With DRIP the balance grows to about 58,137 because each year compounds at 1.05 x 1.04. Without DRIP the shares appreciate to a smaller balance and you collect roughly 13,888 in cash dividends along the way, ending near 40,421 in total — so reinvesting is worth about 17,716 more over the 20 years.
Frequently asked questions
What is a dividend reinvestment plan (DRIP)?
A DRIP uses each dividend to buy additional shares automatically, instead of paying it to you as cash. Those extra shares then pay their own dividends, so the position compounds on its total return — price growth and reinvested income together — rather than price alone.
How does reinvesting dividends beat taking cash?
When you reinvest, the balance grows each year by both the share-price gain and the dividend, so it compounds at (1 + price growth) x (1 + yield). Taking cash grows only the price and leaves the dividends sitting idle. Over many years the reinvested dividends-on-dividends pull well ahead — that gap is the DRIP advantage this calculator shows.
What if the dividend yield is zero?
With a zero yield there are no dividends to reinvest, so the two paths are identical: both just track the share-price growth. The DRIP advantage is zero. Reinvestment only helps when there is income to reinvest.
Does this account for taxes and fees?
No. The model assumes dividends are reinvested in full with no tax withheld and no trading costs. In reality, dividend taxes, fund fees and brokerage charges reduce the compounding, so treat the DRIP advantage shown here as an upper bound rather than a precise forecast.
Can the share price fall in this model?
Yes. You can set a negative annual price growth to model a declining share price. Dividends are still reinvested, but on a shrinking base, so the final value can end below the initial investment. Real prices vary year to year; this uses one constant rate as an illustration.
Sources
- www.investopedia.com/terms/d/dividendreinvestmentplan.asp
- www.hartfordfunds.com/insights/market-perspectives/equity/the-power-of-dividends.html
Reviewed by the YouCalc Team · Last reviewed
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