See how much more you accumulate by reinvesting dividends compared to taking them as cash.
A Dividend Reinvestment Plan (DRIP) automatically uses dividend payments to purchase additional shares of the same stock or fund instead of paying dividends as cash. Over time, this creates a compounding effect: more shares generate more dividends, which buy more shares, which generate even more dividends. DRIPs are one of the most powerful passive wealth-building strategies for long-term investors.
Enter your initial investment amount, the stock price per share, the annual dividend yield, the expected annual stock price growth rate, and the number of years. The calculator shows your total shares accumulated, total dividends received, portfolio value with and without reinvestment, and the difference DRIP makes over time. The longer the time period, the more dramatic the reinvestment advantage becomes.
Consider $10,000 invested in a stock yielding 3% with 7% annual price growth. After 20 years without DRIP, you have $38,700 in stock value plus $8,400 in cash dividends = $47,100. With DRIP, you have approximately $54,300 because reinvested dividends bought additional shares that also appreciated and generated their own dividends. That is $7,200 extra from doing nothing but reinvesting. The Compound Interest Calculator shows how compounding works across different scenarios.
Dividend Reinvestment Plans (DRIPs) automatically use cash dividends to purchase additional shares of the same stock or fund. The power of DRIPs comes from compound growth: reinvested dividends buy more shares, which generate more dividends, which buy more shares. Historically, dividends have accounted for approximately 40% of the S&P 500's total return over the long term. A $10,000 investment in a stock yielding 3% that grows 7% annually would grow to approximately $76,123 over 30 years with DRIPs versus $57,435 without. Most brokerages offer commission-free DRIPs. Some companies offer direct stock purchase plans with DRIPs that allow partial share purchases and may even offer a 1 to 5% discount on reinvested shares. DRIPs are most effective in tax-advantaged accounts (IRA, 401k) where reinvested dividends are not taxed annually.