Dividend reinvestment calculator with dividend growth and share price growth. See ending balance, shares, and income with and without DRIP reinvesting.
Dividend Reinvestment Formula
Each period, the dividends received buy more shares at the current price, so the share count compounds:
Shares(t+1) = Shares(t) + (Shares(t) * D(t) / n) / P(t)
The ending value is simply the final share count times the final share price:
V = Shares(end) * P(end)
Variables:
- Shares(t) is the number of shares held in period t
- D(t) is the annual dividend per share in period t, growing at the dividend growth rate
- n is the number of dividend payments per year (12, 4, or 1)
- P(t) is the share price in period t, growing at the price growth rate
- V is the ending portfolio value ($)
Enter your starting investment, the dividend yield, and the holding period; the calculator simulates every payment period. The simple mode holds the dividend and price flat, while the growth mode compounds both the dividend and the share price each year. Results show your ending value, total dividends reinvested, share count growth, the annual income your final position throws off, and – the key comparison – how much more you end with versus taking every dividend in cash.
Reinvesting vs Taking Cash
The table shows $10,000 invested at a 3% yield with 5% annual dividend growth and 6% annual price growth, dividends paid quarterly.
| Years | Value with DRIP | Value without (incl. cash) | DRIP advantage |
|---|---|---|---|
| 5 | $15,730 | $15,180 | $550 |
| 10 | $24,900 | $22,850 | $2,050 |
| 20 | $63,900 | $52,600 | $11,300 |
| 30 | $167,800 | $122,700 | $45,100 |
Values are rounded to the nearest $50 and grow fastest late in the period, which is typical of compounding: the reinvested shares themselves start paying dividends that buy still more shares.
Example Problems
Example 1: Simple reinvestment.
You invest $10,000 at a steady 4% yield paid quarterly for 10 years with no growth. Each quarter pays 1% of the position, which buys new shares at an unchanged price. After 40 quarters the position compounds to 10,000 * (1 + 0.01)^40 = $14,889 – $4,889 of reinvested dividends versus $4,000 if you had taken them as cash.
Example 2: Income after growth.
You invest $25,000 at a 3% yield with 5% dividend growth, reinvesting quarterly for 15 years. The calculator compounds the share count while the per-share dividend grows, and reports the final year’s dividend income – which roughly doubles even before counting the extra shares the DRIP added.
Frequently Asked Questions
What is a DRIP?
A dividend reinvestment plan automatically uses each cash dividend to buy more shares, often fractional and commission-free, instead of depositing the cash. Most brokers offer DRIP enrollment per holding with a single setting.
Are reinvested dividends still taxed?
In a taxable account, yes – dividends are taxable in the year paid whether or not you reinvest them, and each reinvestment creates a new tax lot with its own cost basis. Inside an IRA or 401(k) the reinvestment compounds without annual tax.
When does reinvesting matter most?
Over long horizons and with higher yields. The advantage over taking cash is modest in the first few years but widens sharply past a decade, because reinvested shares generate their own dividends. Retirees who need the income are the usual exception.
