Dividend Reinvestment (DRIP) Calculator
See how reinvesting dividends compounds your holdings over time. Enter starting shares, share price, dividend yield, and growth rates to project portfolio value, share count, and total dividends earned.
How to use this tool
- Enter starting shares, share price, annual dividend yield, annual dividend growth rate, annual share price appreciation and years in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your projected portfolio value and the full breakdown beneath it.
Dividend reinvestment (DRIP) uses dividend income to buy more shares, which then generate more dividends — a compounding loop. Combined with share price appreciation and dividend growth, the long-term effect is substantial.
⚠ This tool provides general estimates for education only and is not financial, tax or legal advice. Figures may not reflect your situation — verify with a qualified professional.
Formula
Annual dividends earned: Annual Dividends = Shares × Price × Yield / 100
New shares purchased: New Shares = Annual Dividends / Price
Each year the share price and dividend yield also grow: Pricey+1 = Pricey × (1 + appreciation / 100), Yieldy+1 = Yieldy × (1 + dividend growth / 100)
How it works
The calculator models a dividend reinvestment plan (DRIP) by computing dividends each year based on current holdings and share price, then immediately purchasing additional fractional shares at that price. Portfolio value is the product of total shares and current price at each annual snapshot.
The model assumes dividends are paid and reinvested once per year, share price grows at a constant rate, and the dividend yield itself can grow annually. No taxes, brokerage fees, or partial-share restrictions are modelled, so real returns will differ.
Worked example
- Starting shares: 100. Share price: $50. Dividend yield: 0%. Annual appreciation: 0%. Years: 10.
- With a 0% yield, no dividends are paid and no new shares are purchased each year.
- Share price does not appreciate (0%), so portfolio value stays at 100 × $50 = $5,000 throughout.
Projected portfolio value after 10 years: $5,000 (100 shares, $0 total dividends earned).
Common mistakes to avoid
- Using the current dividend yield without accounting for potential cuts — yield is not guaranteed, and companies can reduce or eliminate dividends, making long-term projections optimistic.
- Ignoring dividend taxes in taxable accounts; DRIP shares are still taxable in the year received, so the amount actually reinvested is less than the gross dividend.
- Entering yield and price growth independently without recognizing they can move inversely — as share price rises, yield falls if the dividend is flat, slowing share accumulation.
Key terms
- DRIP (Dividend Reinvestment Plan)
- An arrangement where dividend payments are automatically used to buy additional shares of the same stock or fund.
- Dividend yield
- Annual dividends per share expressed as a percentage of the current share price.
- Dividend growth rate
- The expected annual rate at which dividends per share increase over time.
- Price appreciation
- The percentage increase in a share's market price per year, independent of dividend income.
- Total return
- Combined gain from capital appreciation and reinvested dividends over the holding period.
Frequently asked questions
- What is a DRIP?
- A Dividend ReInvestment Plan automatically reinvests dividends into additional shares, often commission-free and sometimes at a slight discount.
- Should I reinvest dividends?
- Generally yes, especially during the accumulation phase. Reinvesting keeps all capital working and accelerates share growth through compounding.