Dividend Reinvestment (DRIP) Calculator
Project the growth of an investment when dividends are automatically reinvested, compared with taking dividends as cash.
Result
- With dividends reinvested$56,044.11
- Price appreciation only$32,071.35
- Dividends taken as cash (accrued)$11,035.68
- Total without DRIP$43,107.03
- DRIP advantage$12,937.08
- Total return multiple5.60ร
Step-by-step
- With DRIP, value compounds at price growth + yield: $10,000.00 ร (1 + 0.06 + 0.03)^20 = $56,044.11.
- Without DRIP, only price compounds: $32,071.35, plus $11,035.68 of dividends taken as cash = $43,107.03.
- Reinvesting dividends adds $12,937.08 over 20 years through compounding.
How to use this calculator
- Enter the initial investment amount.
- Enter the expected annual price growth and the dividend yield.
- Enter the holding period in years.
- Compare the ending value with DRIP against taking dividends as cash.
About this calculator
A dividend reinvestment plan (DRIP) automatically uses the cash dividends a stock or fund pays to buy more shares, rather than paying them out as cash. Those extra shares then earn their own dividends and price appreciation, so returns compound on a growing base โ the same engine that makes long-term equity investing so powerful. This calculator contrasts two paths for the same investment: reinvesting every dividend (DRIP), where the total return compounds at roughly the sum of price growth and dividend yield, versus taking dividends as cash, where only the share price compounds and the dividends pile up un-grown on the side. Over long horizons the DRIP advantage can be substantial. The model assumes constant rates for clarity; remember that in a taxable account, reinvested dividends are still taxed in the year they are paid.
How it works โ the formula
With DRIP: Value = P ยท (1 + g + y)^t
Without DRIP: Price = P ยท (1 + g)^t, Cash dividends = ฮฃ yยทPยท(1+g)^i
(g = price growth, y = dividend yield)Reinvesting compounds price growth and yield together; taking cash compounds only price growth and leaves dividends un-grown.
Worked examples
- Inputs:
- principal=10000, priceGrowth=6, divYield=3, years=20
- Output:
- with DRIP โ $56,044
- Inputs:
- principal=10000, priceGrowth=6, divYield=0, years=20
- Output:
- DRIP = price-only โ $32,071
- Inputs:
- principal=5000, priceGrowth=4, divYield=4, years=30
- Output:
- with DRIP โ $43,219
Limitations
- Constant rates; real prices and dividends vary.
- Pre-tax โ taxable accounts owe tax on reinvested dividends.
- Annual compounding approximation of intra-year reinvestment.
Illustrative projection, not investment advice or a performance guarantee.