Dividend Reinvestment (DRIP) Calculator
A DRIP (dividend reinvestment plan) uses every dividend payment to buy more shares — which then pay their own dividends. This calculator compares reinvesting versus taking the cash.
Portfolio Value
$57,924
Future Shares
180.6
from 100 today
Annual Dividend Income
$1,738
Total Dividends Reinvested
$15,662
Reinvesting vs. Taking Cash
DRIP compounding
Shares_{t+1} = Shares_t × (1 + Yield) Price_{t+1} = Price_t × (1 + g)Each year the dividend cash buys new shares at the current price, then the price grows by g. Both the share count and the price compound.
How It Works
- 1Every dividend automatically purchases additional shares — including fractional shares.
- 2Those new shares generate their own dividends, creating a second compounding engine on top of price growth.
- 3The gap between the two chart lines is the pure value created by reinvestment.
Frequently Asked Questions
Do I pay taxes on reinvested dividends?
Yes, in a taxable account reinvested dividends are still taxable income in the year received. Inside an IRA or 401(k) they compound tax-free.
How do I enroll in a DRIP?
Nearly every broker offers free automatic dividend reinvestment — it’s usually a single toggle per holding.
When should I stop reinvesting?
Typically when you need the income in retirement, or to redirect cash toward rebalancing.
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