Dividend Reinvestment Calculator
Every reinvested dividend buys shares that pay their own dividends — the quiet flywheel of income investing. Compare DRIP vs. taking the cash, side by side, with dividend and price growth included.
▸ Show year-by-year comparison
| Period | With DRIP | Cash total | DRIP edge |
|---|
Estimates are for illustration and education only — not financial advice. Dividends are not guaranteed; constant growth rates are assumed.
Why DRIP is compounding in its purest form
A dividend taken as cash is a one-time payment. A dividend reinvested becomes shares — and those shares pay dividends of their own, which buy more shares, forever. That loop is exactly the compound interest mechanism, expressed in share count instead of a balance. Historically, a large share of the stock market's total long-run return has come from reinvested dividends, not price gains alone.
What the comparison shows
The "cash" line isn't naive — it credits you every dividend you pocket, on top of the portfolio's price growth. DRIP still pulls ahead, because pocketed cash sits still while reinvested cash keeps working. The gap (the "DRIP advantage") starts small and accelerates: doubling the holding period far more than doubles it.
Three growth rates, one flywheel
The model compounds three things at once: dividend growth raises the payout per share, price growth raises what each reinvestment costs (and what your shares are worth), and DRIP raises the share count itself. Realistic long-run inputs for quality dividend payers: 2–4% yield, 5–8% dividend growth, 3–6% price growth.
Related tools
For the income-stream view of the same mechanics (yield on cost, per-year income), see the dividend yield calculator. To compare against a total-return index approach, the compound interest calculator models the combined rate directly.
The DRIP advantage over time
$25,000 at 3.5% yield, 6% dividend growth, 4% price growth — reinvesting vs. pocketing dividends.
| After | With DRIP | Cash total | DRIP edge |
|---|---|---|---|
| 10 years | $52,336 | $49,349 | +$2,987 |
| 20 years | $117,391 | $101,591 | +$15,800 |
| 30 years | $288,109 | $219,073 | +$69,036 |
| 40 years | $791,779 | $507,148 | +$284,631 |
Rounded simulation figures, quarterly reinvestment, no taxes or fees — illustrative only.
How reinvesting dividends compounds
A DRIP uses each dividend to buy more shares, which then pay their own dividends. That loop — dividends buying shares buying dividends — is compounding applied to income, and it's what separates total return from price return.