Dividend Reinvestment (DRIP) Calculator

What this estimate assumes

• Dividends are modeled as paid and reinvested monthly at the current share price — most stocks actually pay quarterly, so this smooths out the real, lumpier cadence but lands on a very similar long-run total.
• The dividend growth rate compounds the per-share payout once a year, independently of share price growth, so you can model a company that raises its dividend faster or slower than its stock price.
• The "dividends taken as cash" comparison assumes that cash is simply set aside, earning no return of its own — it's there to isolate the effect of reinvesting, not to model a specific alternative investment.
• Assumes constant growth and yield rates for the entire period, no taxes on dividends, and no dividend cuts — real stocks fluctuate and dividends are never guaranteed.

Curious about the tradeoffs? Read Dividend Reinvestment: The Case For and Against.

How to use this calculator

1. Enter how much you're starting with in Initial investment ($).
2. Enter the stock's current share price in Current share price ($) — this is used to work out how many shares your money buys today, and how many additional shares each reinvested dividend buys going forward.
3. Enter the stock's current dividend yield (its annual dividend per share divided by its share price, as a percent) in Current dividend yield (%). You can usually find this listed right on any stock quote page.
4. If you expect the company to raise its dividend over time, enter that annual rate in Annual dividend growth (%). Leave it at 0 to model a flat, never-increasing payout instead.
5. Enter how much you expect the share price itself to grow each year in Estimated annual share price growth (%), and add any planned extra buying in Additional monthly investment ($) if you plan to keep adding money.
6. Set Years to project and click Project my DRIP returns to compare your reinvested-dividend total against simply taking the dividends as cash.

Worked example

Using the calculator's own default values — a $10,000 initial investment at a $50 share price, a 3% current dividend yield, 5% annual dividend growth, 6% annual share price growth, no extra monthly investment, projected over 20 years — here's the mechanism step by step:

$10,000 ÷ $50 a share = 200 shares to start. A 3% yield on a $50 share works out to $1.50 per share per year, or roughly $0.125 per share per month. On 200 shares, that's about $25 in the very first month's dividend. Reinvested at roughly the $50 share price, that $25 buys about half a share. On its own that's a small amount — but every one of those new shares now earns its own dividend the following month, on top of the original 200, and the month after that, those new shares' dividends buy even more shares.

Run that mechanism forward across 240 months with two tailwinds working the whole time: the per-share dividend itself grows 5% every year, so the dividend check in year 15 is paid at a noticeably higher rate per share than the one in year 1 — and the share price grows 6% a year, so every dollar of dividend being reinvested is also buying into an asset that keeps appreciating on its own. Each of these three effects (more shares, a bigger dividend per share, and a higher share price) compounds on top of the other two at the same time, which is why dividend reinvestment calculators like this one are genuinely too complex to compute by hand to the exact cent — there's no single clean formula the way there is for a fixed-rate compound interest calculation.

What can be said honestly: with reinvestment compounding monthly over 20 years, a 3% starting yield growing 5% a year on a portfolio appreciating 6% a year typically ends up meaningfully ahead of simply taking the dividends as cash and not reinvesting them, because the cash-as-dividends scenario misses out on all three compounding effects above. Plug these exact numbers — or your own stock's numbers — into the calculator above to see the precise month-by-month projection and the exact dollar gap between reinvesting and taking the cash.

Frequently asked questions

Why does reinvesting dividends make such a big difference over 20 years?

Because each reinvested dividend buys more shares, and those new shares earn their own dividend next month on top of the shares you already held. That snowball effect — dividends buying shares, which generate more dividends, which buy more shares — is on top of the share price itself appreciating, so reinvesting compounds in two directions at once instead of one.

What's the difference between dividend yield and dividend growth?

Dividend yield is the annual dividend divided by the current share price, expressed as a percent — it tells you how much income the stock pays right now. Dividend growth is how much that per-share dividend payment itself increases each year, independent of the share price. A stock can have a modest starting yield but strong dividend growth, and end up paying much more income years down the road than a high-yield stock with flat or shrinking dividends.

Should I enter my brokerage's DRIP purchase price or the market price?

Use the current market share price for "Current share price ($)." Many brokerages execute dividend reinvestment purchases at or very close to the prevailing market price anyway, and this calculator is modeling a long-run projection, not simulating the exact execution price of any single trade.

What if the company cuts or suspends its dividend?

This calculator assumes a constant yield and a constant (or growing) dividend for the entire period you project, with no cuts. Real companies do sometimes cut or suspend dividends, especially during recessions or company-specific trouble, which would reduce your actual results below what's projected here. If you want a more conservative estimate, try lowering the dividend growth rate or running a shorter time horizon.

Is reinvesting dividends always better than taking the cash?

For pure long-run growth of the position, reinvesting almost always produces a larger ending balance than taking dividends as uninvested cash, because reinvested money keeps compounding. But if you need the dividend income to cover living expenses now, or you'd otherwise invest the cash somewhere that performs better, taking it as cash can be the right call for your situation — this calculator compares growth, not your personal cash-flow needs.

Does this calculator account for taxes on dividends?

No. In a taxable brokerage account, dividends are generally taxable in the year you receive them, even if you reinvest them automatically — so your real after-tax total would be somewhat lower than this projection. Dividends received inside a tax-advantaged account like an IRA or 401(k) aren't taxed the same way, which is one reason many investors prefer to hold dividend-paying stocks there.