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Dividend Reinvestment Calculator

Enter your investment, yield, growth and contributions to model DRIP compounding.

How it is calculated

The model runs year by year. At the start of each year the dividend is dividend = balance × yield%. The new balance is balance × (1 + growth%) + dividend + contribution: the old balance grows with the share price, the dividend is added back (reinvested) and the yearly contribution is added at the end of the year, so it starts earning from the next year. The final value is the balance after the last year; total dividends is the sum of the yearly dividends; total invested is the starting amount plus all contributions. Yield and growth are percentages per year, and the contribution is optional (empty means 0). The number of years is rounded to a whole number, so 2.5 counts as 3. The model uses constant rates and ignores taxes, fees and share-price swings.

Worked example

Start with 10,000, yield 3%, growth 5%, contributions 1,200 a year, 3 years. Year 1: dividend 10,000 × 3% = 300; balance 10,000 × 1.05 + 300 + 1,200 = 12,000. Year 2: dividend 360; balance 12,000 × 1.05 + 360 + 1,200 = 14,160. Year 3: dividend 424.80; balance 14,160 × 1.05 + 424.80 + 1,200 = $16,492.80. Total dividends: 300 + 360 + 424.80 = $1,084.80. Total invested: 10,000 + 3 × 1,200 = $13,600.00.

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Common mistakes

  • Entering the yield and growth as decimals (0.03, 0.05) instead of percentages (3, 5).
  • Using total return as the growth rate. Growth here is share-price growth only; the dividend yield is added on top, so entering total return in growth double counts the dividend.
  • Entering a monthly contribution in the yearly contribution field, which understates what you add each year by a factor of twelve.
  • Reading the final value as after-tax. Dividend tax and fees are not deducted, so real results will be lower.
  • Entering a fractional number of years and expecting partial-year growth; the tool rounds to whole years.

Sources

About this calculator

A DRIP (Dividend Reinvestment Plan) projection compounds three growth sources together year by year: the dividend yield (converted into new shares bought at the current price instead of paid out as cash), share price growth, and any regular new contributions — each year's dividend is calculated on a growing share balance, so the reinvested amount itself grows over time, which is what makes DRIP compounding accelerate faster than a simple fixed-yield projection.

Long-term retail investors and dividend-growth investors use this to see how automatically reinvesting dividends instead of spending them changes a portfolio's trajectory over years or decades, while financial planners use the same model to illustrate the power of compounding to clients building a retirement or income portfolio.

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