Investing
Dividend Reinvestment (DRIP) Calculator
Reinvesting dividends buys more shares, which pay more dividends, which buy more shares. Over decades that compounding of the share count — not just the price — is where much of the total return of dividend stocks has historically come from.
Tested against worked examplesHow we verify
How fast the dividend per share rises each year.
Value with dividends reinvested: $13,045
Value with dividends reinvested
$13,045
Growing from 100 shares to 145.7.
In a taxable account, dividends are taxed in the year received whether or not you reinvest them — so reinvesting does not defer tax, and you owe it from other money. The compounding advantage is real, but it is largest in tax-advantaged accounts where the dividends grow untaxed.
- Value taking dividends as cash
- $11,470
- Reinvestment advantage
- $1,575
- Total dividends over the period
- $3,051
- Final share count
- 145.7
- Yield on original cost
- 9.49%
This year's dividend against what you first paid.
Compare scenariosTry three values of one input
| Shares owned | |||
|---|---|---|---|
| Value with dividends reinvested | $11,740 | $13,045+$1,304 | $14,349+$2,609 |
| Value taking dividends as cash | $10,323 | $11,470+$1,147 | $12,617+$2,294 |
| Reinvestment advantage | $1,418 | $1,575+$158 | $1,733+$315 |
| Total dividends over the period | $2,746 | $3,051+$305 | $3,357+$610 |
| Final share count | 131.1 | 145.7+14.6 | 160.3+29.2 |
| Yield on original cost | 9.49% | 9.49%+0% | 9.49%+0% |
Every other input stays at the value you set above — currently 100 for shares owned. Differences are measured against the first column.
Saved scenariosSave this calculation
Saved in this browser only — no account, and nothing is sent to us. Clearing your browser data deletes them.
How this calculator works
Each year the holding pays its dividend per share on the current share count; reinvesting buys additional shares at the current price. The dividend per share and the price then grow at their respective rates. Final value is the ending share count times the ending price. The cash comparison keeps the share count fixed and adds up the dividends taken.
Growth rates are assumed steady, which real dividends and prices are not — dividends can be cut, and prices are volatile. Dividends are reinvested annually rather than each quarter, a small simplification. Taxes are not deducted; in a taxable account they apply yearly and reduce the reinvestment advantage relative to a sheltered account.
What this assumes
- Every dividend is reinvested at the price you enter, with no cash taken.
- Reinvested dividends are still taxable in a taxable account in the year received, even though no cash reaches you.
- Fractional share purchases are assumed available; not all brokers offer them.
What changes this number
- Time
- Reinvestment compounds on itself, so the effect is small for years and then substantial.
- Tax location
- In a taxable account you owe tax on money you never received, which is a real cash-flow consideration.
- Cost basis tracking
- Every reinvestment adds basis. Omitting it later overstates the gain and the tax.
A worked example
Take the 100 shares at $50, 4% yield scenario. These figures are produced by the calculator above, not written alongside it, so they always match what the tool returns.
What you enter
- Shares owned
- 100
- Share price
- $50
- Annual dividend per share
- $2
- Years
- 10 years
What it returns
- Value with dividends reinvested
- $13,045
- Value taking dividends as cash
- $11,470
- Reinvestment advantage
- $1,575
- Total dividends over the period
- $3,051
- Final share count
- 145.7
In a taxable account, dividends are taxed in the year received whether or not you reinvest them — so reinvesting does not defer tax, and you owe it from other money. The compounding advantage is real, but it is largest in tax-advantaged accounts where the dividends grow untaxed.
Try an example
Frequently asked questions
What is a DRIP?
A dividend reinvestment plan automatically uses each dividend to buy more shares — often fractional ones — of the same holding, instead of paying you cash. Many brokerages and companies offer it for free. It keeps your money working without you doing anything, and buys steadily regardless of price.
Is reinvesting dividends worth it?
Over long horizons, substantially. Reinvested dividends compound the share count on top of price growth, and studies of long-run stock returns attribute a large share of total return to reinvested dividends rather than price appreciation alone. The effect grows with time, so starting early matters most.
Are reinvested dividends taxed?
Yes, in a taxable account. Reinvesting is treated as receiving the cash and then buying shares, so the dividend is taxable in the year paid even though you never saw it. You owe that tax from other funds. In an IRA or 401(k), reinvested dividends grow untaxed until withdrawal.
What is yield on cost?
This year's dividend measured against what you originally paid for the shares, rather than their current price. As a company raises its dividend over the years, the yield on your original cost climbs — a holding bought at a 4% yield might pay 8% or more on cost after a decade of dividend growth.
Should I always reinvest?
Not necessarily. Reinvesting concentrates more money into a single holding, which can unbalance a portfolio. Retirees often take dividends as cash for income. And you might prefer to pool dividends and direct them to underweight holdings when rebalancing. Automatic reinvestment is convenient, not always optimal.
Related calculators
Dividend Calculator
Calculate the dividend income from a stock or fund holding — annual and monthly payout, the amount invested, and the dividend yield.
Investment Calculator
Project an investment portfolio's growth with monthly contributions — final value, your money vs market growth, and the year-by-year path.
Portfolio Rebalancing Calculator
See exactly what to buy and sell to bring a portfolio back to its target allocation — and how far a new contribution alone can do the job without selling.
Compound Interest Calculator
See how your savings grow with compound interest and monthly contributions — final balance, interest earned, and a year-by-year growth table.
Disclaimer: DayCents provides this calculator for educational purposes only. Results are estimates based on your inputs and the stated assumptions — they are not financial advice, a quote, or an offer of credit. Consult a qualified financial professional before making major money decisions.