Dividend Reinvestment Plan (DRIP) Growth Calculator

Calculate how dividend reinvestment (DRIP) compounds over time. Project portfolio growth, annual dividend income, and compare to taking cash dividends.

Dollar amount or shares (see below)

Used to convert dollars to shares

Total dividends paid per share per year

Historical DGR for mature companies: 2-5%

Qualified dividends: 0/15/20%. Ordinary: 10-37%

Shares = Initial/P + Σ(Monthly) + Σ(Dividends × (1-t) / Price). Dividends grow by DGR each year: D_year = D_0 × (1+DGR)^year. Final Value = Shares × Price.
$10,000 initial (66.67 shares @$150), $500/month, $3.00 dividend (2% yield), 3% DGR, 15% tax, 10 years: Final value = $102,847, Annual income = $3,850, Total shares = 685.64.

What is a DRIP and how does it work?

A Dividend Reinvestment Plan (DRIP) automatically uses cash dividends to purchase additional shares of the same stock, often at a discount (1-5%) and with no commission. This creates compounding - dividends buy shares, those shares earn dividends, which buy more shares. Over time, the compounding effect can significantly boost returns.

What is a good dividend growth rate?

Dividend Growth Rate (DGR) varies by sector: Utilities/Consumer Staples: 2-4% annually, Dividend Aristocrats: 5-7% (25+ years of increases), Tech/Young Dividends: 10-15% (but less stable). Historical S&P 500 dividend growth approximates 4-6%. Be wary of >10% DGR as unsustainable long-term.

How are DRIP dividends taxed?

DRIP dividends are taxed the same as cash dividends, even though you don't receive cash. Qualified dividends (held >60 days) are taxed at 0/15/20% (based on income). Ordinary dividends are taxed at your marginal rate (10-37%). Use tax-advantaged accounts (IRA/401k) for DRIPs to defer/avoid taxes.

What is the compounding advantage of DRIPs?

Without DRIP: $10k at 4% dividend = $400/year cash (no compounding). With DRIP: Year 1: $400 ÷ $150 = 2.67 shares. Year 2: (100+2.67) × $3 = $307.67 ÷ $150 = 2.05 more shares, etc. After 10 years with 3% DGR: DRIP = ~$13,847 vs Cash = $12,950 (6.9% advantage).