Amount invested at the start.
Price per share today.
Annual dividend as a percent of price.
Expected share price appreciation.
How fast the dividend per share grows.
How long you hold the position.
Final Value (With DRIP)
$61,666
Final Value (No DRIP)
$48,617
DRIP Advantage
$13,049
Total Dividends Reinvested
$13,143
Final Share Count
318.7
Estimate only — not financial advice; lender terms, fees, and taxes vary. Read the full disclaimer ↓
Share count, dividends received, and portfolio value at the end of each year when dividends are reinvested.
| Year | Shares | Dividends | Value |
|---|---|---|---|
| 1 | 205.6 | 300 | 11000 |
| 2 | 211.3 | 324 | 12094 |
| 3 | 217 | 349 | 13290 |
| 4 | 222.7 | 377 | 14597 |
| 5 | 228.5 | 406 | 16025 |
| 6 | 234.3 | 437 | 17584 |
| 7 | 240.2 | 471 | 19286 |
| 8 | 246.1 | 507 | 21143 |
| 9 | 252 | 545 | 23168 |
| 10 | 258 | 586 | 25376 |
| 11 | 264 | 630 | 27783 |
| 12 | 270 | 677 | 30405 |
| 13 | 276 | 727 | 33261 |
| 14 | 282.1 | 781 | 36370 |
| 15 | 288.2 | 838 | 39754 |
| 16 | 294.3 | 899 | 43435 |
| 17 | 300.4 | 963 | 47439 |
| 18 | 306.5 | 1033 | 51792 |
| 19 | 312.6 | 1106 | 56524 |
| 20 | 318.7 | 1185 | 61666 |
Dividends each year are reinvested to buy more shares at the year-end price.
$10,000 at $50/share, 3% yield, 7% price growth, 5% dividend growth, 20 years.
Final Value (DRIP)
~$61,666
Final Value (No DRIP)
~$48,617
DRIP Advantage
~$13,049
Total Dividends Reinvested
~$13,143
Reinvesting dividends buys extra shares that themselves pay dividends, adding roughly $13,049 over 20 years versus taking the cash, on top of price appreciation.
A Dividend Reinvestment Plan, or DRIP, is an arrangement where the cash dividends a stock or fund pays are automatically used to buy more of the same shares. Instead of landing in your account as spendable cash, each dividend quietly adds to your position.
Many brokers and companies offer this at no extra cost, sometimes allowing fractional shares so every cent is put back to work. The appeal is its simplicity: once it is switched on, your holding grows on its own without any action from you.
The power of a DRIP comes from a small loop that repeats every year. Your shares pay a dividend, that dividend buys additional shares, and those new shares pay dividends of their own the next time around.
Because your share count keeps rising, both the dividends you collect and any price appreciation apply to a steadily larger base. Given enough time, this self-reinforcing cycle can add a meaningful amount on top of what the price alone would have delivered.
The alternative to reinvesting is taking dividends as cash. That suits investors who want a regular income stream, for example in retirement, where the point of the holding is to spend the payouts rather than grow them.
For long-term growth, reinvesting usually comes out ahead because of the extra shares it accumulates along the way. The right choice depends on whether you need the money now or you are still building wealth and can let it compound.
Many companies raise their dividend over time. When that happens, the income you earn relative to your original purchase price, known as your yield on cost, can climb well above the yield a new investor would see today.
Dividend growth often matters as much as the starting yield, sometimes more. A modest yield that increases year after year keeps buying more shares and lifting your income, which can outpace a high yield that never grows.
In a regular taxable account, reinvested dividends are generally still treated as income in the year they are paid. That means you can owe tax on money you never actually received as cash, since it went straight back into shares.
Tax-sheltered accounts often defer or avoid this, letting reinvestment compound untaxed until later. Because rules differ widely by country and account type, it is worth understanding how dividends are taxed where you live before assuming the full reinvested amount is yours to keep.
A DRIP steadily increases your stake in a single company or fund, which concentrates your exposure to it. If that holding falls in value, the larger position falls with it, so reinvestment magnifies the downside as well as the upside.
Dividends are also not guaranteed. Companies can reduce or suspend them, particularly during difficult periods, which would shrink the reinvestment loop the plan depends on. A DRIP does not remove ordinary market and business risk; it simply compounds whatever happens.
If you reinvest, favor holdings you are comfortable owning more of over many years, since a DRIP keeps adding to them automatically. Periodically check that the position has not grown so large it unbalances your wider portfolio.
Keep records of each reinvested dividend, as they affect your cost basis and can matter at tax time. And revisit the plan if your needs change; switching from reinvesting to taking cash is usually straightforward when you eventually want the income.
A Dividend Reinvestment Plan automatically uses your cash dividends to buy more shares, often commission-free, so your position compounds over time.
For long-term growth, reinvesting usually wins because of compounding. If you need income now, taking dividends as cash may suit you better.
Each reinvested dividend buys additional shares, and those new shares pay dividends of their own the following year. Over time your share count grows on its own, so the dividends and the price appreciation both work on a larger base.
Yield on cost compares the current dividend per share to the price you originally paid, rather than today price. As a company raises its dividend over the years, your yield on cost can climb well above the yield a new buyer would get.
Over long periods it often matters more. A modest starting yield that grows steadily can out-earn a high yield that stays flat, because the rising payout keeps buying more shares and lifting your income each year.
In a regular taxable account, dividends are generally taxable in the year they are paid even if you reinvest them, so you may owe tax without receiving cash. In tax-sheltered accounts this is usually deferred or avoided. Rules vary, so check your local tax treatment.
Yes. Reinvesting buys more shares, and if the share price falls those shares lose value like any other. A DRIP compounds your exposure to the company, which cuts both ways, so it does not remove the underlying market risk.
No. The calculator assumes steady price growth, a steady dividend, and full reinvestment with no fees or taxes. Real dividends can be cut, prices move unpredictably, and costs apply, so treat the output as an illustration rather than a forecast.
Figures on this page are checked against primary, authoritative sources. Links open in a new tab.
Investment disclaimer
Returns are assumptions, not guarantees. Actual results may vary because of market performance, taxes, fees, inflation, and timing. This is an educational projection, not investment advice.
Built and maintained by Calculator Matters, an independent calculator project. Method checked against published formulas and primary sources · Last reviewed 3 June 2026 · How we calculate · Found an error? corrections@calculatormatters.com