Dividend Reinvestment Calculator
A dividend reinvestment (DRIP) calculator projects how reinvesting your dividends compounds over time. Instead of taking each payout as cash, it buys more shares, which then earn dividends of their own, accelerating income growth. The projection uses your assumptions and keeps share-price movement fixed. Actual DRIP results depend on dividend changes, purchase prices, taxes, and whether the company keeps paying dividends.
Estimate income
Adjust the assumptions. Results update in your browser only.
Projected results
Annual income, year 20
$8,236
Total dividends
$64,714
Ending value
$89,714
Value composition
Projection from your assumptions. Not a forecast of share price.
The milestone table below lists the same projected income, reinvested dividends, yield on cost, and ending value values.
Projection milestones
Dividends are after the selected tax rate. Ending value assumes no share price change.
| Year | Income | Reinvested | Yield on cost | Value |
|---|---|---|---|---|
| 1 | $1,000 | $1,000 | 4% | $26,000 |
| 5 | $1,439 | $1,439 | 5.8% | $31,036 |
| 10 | $2,386 | $2,386 | 9.5% | $40,834 |
| 20 | $8,236 | $8,236 | 32.9% | $89,714 |
How the Dividend Reinvestment calculator works
This is a DRIP scenario for compounding dividend income. It highlights how reinvested payouts can add to the base, but it excludes price appreciation and does not forecast total return.
The calculator starts with the investment amount and dividend yield, grows the dividend rate each year, and reinvests each dividend back into the income base. The reinvested amount then helps produce future dividends.
year_1_income = investment_amount * dividend_yield
reinvested_dividends = dividend_income
dividend_base = dividend_base + reinvested_dividends
ending_value = investment_amount + total_reinvested_dividends- DRIP is always on for this calculator because reinvestment is the point of the scenario.
- Dividend growth raises the income rate before each later dividend is reinvested.
- This scenario reinvests dividends before tax. In a taxable account, dividends are still taxed in the year received, which reduces the real compounding edge.
What dividend yield works for DRIP?
For DRIP projections, a sustainable starting yield usually matters more than the highest yield. A 2% to 5% yield is a practical anchor for mature payers, while unusually high yields deserve a closer look in SEC filings for payout pressure, debt, or declining earnings. For more definitions, visit the finance glossary.
When to use it
Helpful for
- Estimating how much DRIP compounding can add to dividend income over a long horizon.
- Comparing taxable and tax-advantaged reinvestment assumptions.
- Testing whether a moderate yield plus growth can beat a higher yield with little growth.
Can mislead when
- You plan to spend dividends as current income instead of reinvesting them.
- The dividend is at risk of being cut, frozen, or suspended.
- Share-price changes, transaction rules, or fractional-share availability drive the actual reinvestment result.
Common mistakes
- Assuming reinvestment removes the tax bill in a taxable account.
- Using a very high starting yield without checking whether the payout can continue.
- Treating the ending value as a full total-return forecast.
- Ignoring that future DRIP purchases happen at future market prices, not a guaranteed fixed price.
Year-by-year example
The default DRIP example shows how after-tax dividends add back to the base and can produce additional future income. Default inputs: $25,000 invested at 4% yield, 5% annual dividend growth, DRIP on, and a 20-year horizon.
Yield on cost rises when reinvested dividends and payout growth lift annual income relative to the original investment.
| Year | Dividend income | Reinvested | Yield on cost | Ending value |
|---|---|---|---|---|
| 1 | $1,000 | $1,000 | 4% | $26,000 |
| 5 | $1,439 | $1,439 | 5.8% | $31,036 |
| 10 | $2,386 | $2,386 | 9.5% | $40,834 |
| 20 | $8,236 | $8,236 | 32.9% | $89,714 |
Frequently asked questions
Reinvesting compounds your returns by putting every dividend back to work, and it is usually most powerful in tax-advantaged accounts. In a taxable account, dividends are still taxed in the year received even when reinvested, which can reduce the edge.
Each dividend buys additional shares, those shares pay their own dividends next period, and the cycle repeats. Over long horizons this snowball can contribute a large share of total return.
No. The projection models the income stream and reinvestment from your assumptions and holds price assumptions fixed, so it is not a total-return or price-appreciation forecast.
In a taxable account, yes: reinvested dividends are generally taxed in the year received. In tax-advantaged accounts like an IRA, taxes are deferred or avoided, which is why DRIP shines there.
Find DRIP candidates
Use the screener to compare dividend yield, growth, and balance-sheet quality before building a reinvestment plan.