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💰 Dividend Reinvestment Calculator

See the power of DRIP (Dividend Reinvestment Plan) investing. Reinvesting dividends compounds your returns dramatically over time — this calculator shows you exactly how much.

DRIP Calculation Method

Each year: Dividend = Portfolio Value × Yield

Reinvested dividend plus price growth: New Value = (Portfolio + Dividend) × (1 + Price Growth)

This compounds both the share price appreciation and the reinvested dividends simultaneously.

How to Use This Calculator

  1. 1
    Enter Initial Investment
    The total amount you invest upfront in dividend-paying stocks or ETFs.
  2. 2
    Enter Dividend Yield
    The annual dividend yield of your investment (e.g., 4% means $4 per $100 invested per year).
  3. 3
    Enter Price Growth
    Expected annual share price appreciation. For dividend growth stocks, 5-8% is typical.
  4. 4
    Review Annual Breakdown
    See exactly how your portfolio value and cumulative dividends grow each year.

Real-World Example

Invest $10,000 in a dividend ETF. Yield: 4%. Price growth: 6%. Hold for 20 years.

Year 1 dividend = $10,000 × 4% = $400 (reinvested)
Total return = dividend yield + price growth = 10%/yr effectively
Final portfolio ≈ $67,000+ after 20 years
Total dividends received ≈ $35,000+

Frequently Asked Questions

A DRIP automatically reinvests dividends to purchase more shares instead of paying them out as cash. This compounds returns over time, as your growing share count generates more dividends.

In taxable accounts, yes — dividends are taxable in the year received even if reinvested. In tax-advantaged accounts (IRA, 401k), dividends can compound tax-free or tax-deferred.

High-quality dividend ETFs yield 2-4%. Individual dividend stocks can yield 3-6%. Very high yields (above 8%) often indicate elevated risk or potential dividend cuts.

This calculator uses a fixed yield on the growing portfolio value, which approximates dividend growth. For explicit dividend growth modeling, combine yield% with the price growth%.

Reinvesting dividends is almost always better in the accumulation phase. The compounding effect is dramatic over 10-20+ year periods. Take cash only in retirement when you need income.

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