Dividend Reinvestment Calculator
Project a DRIP portfolio with growth and reinvested income.
Reviewed by the Calculation Machine team · Updated 24 October 2026 · How we check our maths
Your values
ⓘ Live results
- Portfolio value
- $304,327.54
- Total dividends reinvested
- $93,614.36
- Final annual dividend income
- $11,536.85
- Total contributed
- $85,000.00
Quick answer
With dividend reinvestment (DRIP), each dividend buys more shares, which then pay their own dividends, so income and holdings compound together. Each year the portfolio grows by its dividend yield plus price growth, plus any new money. $25,000 at a 3.5% yield with 5% price growth, 6% dividend growth and $3,000 added yearly grows to about $304,300 in 20 years.
What the Dividend Reinvestment calculator does
This calculator projects a dividend portfolio year by year. Each year it pays a dividend at the current yield, reinvests it along with your yearly addition, then applies share price growth. Because dividend growth can differ from price growth, the yield on the portfolio drifts up or down over time — a detail most simple DRIP calculators ignore.
It reports the final portfolio value, the total dividends reinvested, the dividend income in the final year and the total you contributed. That final-year income is useful for retirement planning: it is what the portfolio would pay if you switched from reinvesting to taking dividends as cash.
Assumptions: growth rates are constant, there are no taxes or fees, and dividends are reinvested once a year. In a taxable account, dividends are taxed even when reinvested, which lowers real-world results. To compare with a plain growth assumption, try the compound interest calculator; to check a single stock's yield, use the dividend yield calculator.
The formula
Each year t: Dividend = Vₜ × yₜ Vₜ₊₁ = (Vₜ + Dividend + A) × (1 + g) yₜ₊₁ = yₜ × (1 + d) ÷ (1 + g)
| Symbol | Meaning | Unit |
|---|---|---|
| Vₜ | Portfolio value at the start of year t | $ |
| yₜ | Dividend yield in year t (annual dividends ÷ portfolio value) | % |
| A | Amount added each year, invested with the reinvested dividend | $ |
| g | Annual share price growth | % |
| d | Annual dividend-per-share growth | % |
This is a standard total-return projection: total return ≈ dividend yield + price growth. The yield adjustment keeps dividends per share growing at d while share prices grow at g. Results are nominal (not adjusted for inflation) and ignore taxes, fund expense ratios and the timing of quarterly payments, all of which reduce real-world outcomes slightly.
Worked examples
Dividend growth investor, 20 years
$25,000 in a dividend fund yielding 3.5%, with 5% price growth, 6% dividend growth and $3,000 added each year.
Inputs
- Starting investment25000 $
- Dividend yield3.5 %
- Price growth5 %/yr
- Dividend growth6 %/yr
- Years20
- Added yearly3000 $
Result
- Portfolio value$304,327.54
- Total dividends reinvested$93,614.36
- Final annual dividend income$11,536.85
- Total contributed$85,000.00
The portfolio reaches about $304,300 from $85,000 contributed, and final-year dividends are about $11,500 — over $960 a month if you stopped reinvesting.
Young investor, low yield, high growth
A 30-year-old starts with $10,000 in a growth-tilted dividend fund yielding 2%, with 7% price growth, 8% dividend growth and $6,000 added a year for 30 years.
Inputs
- Starting investment10000 $
- Dividend yield2 %
- Price growth7 %/yr
- Dividend growth8 %/yr
- Years30
- Added yearly6000 $
Result
- Portfolio value$1,117,543.31
- Total dividends reinvested$233,390.69
- Final annual dividend income$26,505.66
- Total contributed$190,000.00
The value passes $1.1 million on $190,000 contributed. Most of the gain comes from price growth; reinvested dividends add about $233,000 over the period.
High-yield portfolio, little growth
A $250,000 high-yield portfolio paying 4.5%, with only 2% price growth and 3% dividend growth, reinvested for 10 years before retirement with no additions.
Inputs
- Starting investment250000 $
- Dividend yield4.5 %
- Price growth2 %/yr
- Dividend growth3 %/yr
- Years10
- Added yearly0 $
Result
- Portfolio value$482,573.12
- Total dividends reinvested$161,177.05
- Final annual dividend income$22,155.40
- Total contributed$250,000.00
The portfolio nearly doubles to about $482,600 and would pay about $22,200 a year. Here reinvested dividends drive most of the growth, so cutting the yield would hurt more than cutting price growth.
Typical yield and growth assumptions
Long-run figures vary widely by market and period. Use these as rough starting points, not forecasts.
| Style | Dividend yield | Price growth | Dividend growth |
|---|---|---|---|
| Broad US stock index fund | 1–2% | 5–7% | 5–6% |
| Dividend growth fund | 2–3% | 5–7% | 6–8% |
| High-yield / equity income | 3.5–5% | 1–3% | 2–4% |
| REITs | 3–5% | 2–4% | 2–4% |
| Utilities | 3–4% | 2–4% | 3–5% |
Why yield drifts over time
If dividends grow faster than share prices, each dollar of portfolio pays more each year and the yield rises; if prices grow faster, the yield falls. The calculator adjusts the yield each year by (1 + dividend growth) ÷ (1 + price growth).
Over long periods, dividends and prices tend to grow at similar rates, so a large gap between the two inputs for 30 years is unlikely. Keep the dividend growth within a point or two of price growth unless you have a reason not to.
Yield on cost is a related idea: annual dividends divided by what you originally paid. It rises as dividends grow but does not measure current return.
Tax on reinvested dividends
In a US taxable brokerage account, reinvested dividends are taxed in the year they are paid, just as if you took the cash. Qualified dividends are taxed at the long-term capital gains rates of 0%, 15% or 20% depending on income; ordinary dividends, including most REIT dividends, are taxed at your income tax rate.
Each reinvestment raises your cost basis, so keep records — or check that your broker tracks them — to avoid paying tax twice when you sell. Inside an IRA, 401(k) or Roth account, there is no tax on dividends as they are reinvested. Use the capital gains tax calculator to estimate tax on an eventual sale.
How to use the Dividend Reinvestment Calculator
- 1Enter your starting investment and the amount you plan to add each year.
- 2Enter the current dividend yield of your fund or portfolio — shown on the fund's fact sheet or your broker's quote page as the trailing 12-month yield.
- 3Enter expected share price growth and dividend growth per year; keep them close unless you have a reason.
- 4Enter the number of years, then read the final value and final-year dividend income.
Frequently asked questions
Is it better to reinvest dividends or take cash?
While you are building wealth, reinvesting compounds growth and is usually better. Taking cash makes sense when you need the income, or to rebalance into other holdings instead of buying more of the same stock.
What is a DRIP?
A dividend reinvestment plan automatically uses dividends to buy more shares, often including fractional shares, without trading commissions. Most brokers offer it as a setting on each holding.
Do reinvested dividends count as income for tax?
Yes, in a taxable account. They are reported on Form 1099-DIV and taxed in the year paid, even though you never received the cash.
How much do I need invested to live off dividends?
Divide your annual spending need by the portfolio yield. At a 3.5% yield, $40,000 a year needs about $1.14 million; at 4.5%, about $889,000.
Is a high dividend yield always better?
No. A very high yield can signal a falling share price or a dividend at risk of being cut. Total return — yield plus growth — matters more than yield alone.
References
- Publication 550, Investment Income and Expenses — Internal Revenue Service
- Direct Investment Plans: Buying Stock Directly from the Company — US Securities and Exchange Commission
About this calculator
- Built and reviewed by the Calculation Machine team · How we build and test calculators
- Last reviewed: October 24, 2026
- Report an error