DRIP Calculator — Dividend Reinvestment Calculator

How this DRIP calculator works

The calculator runs two portfolios side by side from the same starting point — one that reinvests every dividend and one that takes it as cash — and compares them each year. The core math for each dividend payment is:

Dividend paid       = shares × (annual dividend per share ÷ payments per year)
Dividend after tax  = dividend paid × (1 − dividend tax rate)     (taxable only)
New shares bought   = dividend after tax ÷ current share price
Next payout's base  = old shares + new shares
Portfolio value     = shares × share price

Each year the dividend per share grows by your dividend growth rate and the share price grows by your price growth rate. Reinvested dividends — plus any extra contributions — buy more shares at that year's price, and the loop repeats. The DRIP advantage shown up top is simply the reinvesting portfolio's value minus the cash portfolio's value.

Everything runs in your browser — there is no login, no account, and nothing you enter is stored or sent anywhere. Any result you share lives only in the page URL, so your numbers stay private to you.

How DRIP compounding actually works

A dividend reinvestment plan turns income into growth. Instead of paying cash to your account, each dividend automatically buys more shares of the same stock or fund. Those new shares then earn dividends of their own, which buy still more shares — a compounding loop that accelerates over time. This is the same force behind a compound interest calculator, applied to dividends: growth feeding on growth. The effect is modest in the first few years and becomes the dominant driver of total return over decades.

DRIP vs taking dividends as cash: which builds more wealth

For investors who don't need the income yet, reinvesting almost always builds more wealth because every dividend is put back to work buying shares. Taking the cash keeps your share count flat, so your income only grows if the company raises its dividend. Toggle DRIP off in the calculator to see the exact dollar gap for your inputs. Taking cash still makes sense when you need the income, want to rebalance into other assets, or think the stock is overvalued. To focus purely on income without reinvestment, use the dividend calculator.

DRIP calculator with monthly contributions

Reinvested dividends and fresh contributions stack on top of each other. Add a monthly or annual contribution and the calculator buys additional shares alongside your reinvested dividends — in both the DRIP and no-DRIP scenarios, so the comparison still isolates the reinvestment effect. Combining steady contributions with DRIP is one of the most powerful long-term habits; if you want to model contributions without dividends, the dollar-cost averaging calculator and the monthly dividend income calculator cover those angles.

How the dividend growth rate changes DRIP results

Dividend growth is a quiet multiplier on DRIP. A stock that raises its dividend 7% a year pays more per share every year, so each reinvestment buys shares that pay an ever-larger dividend. Small changes in the growth rate compound into large differences over 20 or 30 years, which is why dividend-growth investors favor companies with long histories of raising payouts. Try 3%, 6%, and 9% growth in the calculator to see how sensitive your ending income and portfolio value are to this single input.

Do you pay taxes on reinvested dividends?

Yes — in a taxable brokerage account you owe tax on dividends in the year they are paid, even when they are reinvested and you never touch the cash. This is a common misconception: reinvesting does not defer the tax. Qualified dividends are taxed at 0%, 15%, or 20%, while non-qualified dividends are taxed at your ordinary rate. Turn on Tax dividends in the calculator to reinvest only the after-tax amount and see how much the drag costs you over time.

DRIP in a Roth IRA vs a taxable brokerage account

The account type changes the math. In a Roth IRA, dividends and reinvestment grow completely tax-free, so 100% of each dividend buys new shares and qualified withdrawals in retirement are never taxed. In a traditional IRA or 401(k), growth is tax-deferred and taxed on withdrawal. In a taxable brokerage, dividends are taxed every year, which slows compounding. Leave the tax toggle off to model a retirement account and turn it on to model a taxable one.

Fractional shares and DRIP: what happens to the leftover cash

Most brokers now reinvest dividends into fractional shares, so every cent goes back to work and nothing is left idle. If your plan only buys whole shares, the leftover cash that isn't enough for a full share waits until enough dividends accumulate to buy one. Turn off Allow fractional shares in the calculator to model whole-share-only reinvestment — you'll see slightly slower compounding because some cash sits uninvested between purchases.

Automatic DRIP through your broker vs manual reinvestment

Automatic DRIP is a free setting at most brokers: dividends are reinvested the moment they are paid, commission-free, usually into fractional shares. Manual reinvestment means the cash lands in your account and you decide when and what to buy — more flexible, but it relies on you actually reinvesting and can leave cash uninvested for days or weeks. For hands-off long-term compounding, automatic DRIP removes the temptation to spend the cash and keeps every dividend working.

When DRIP is a bad idea

Reinvesting is not always the right move. Automatic DRIP keeps buying the same stock regardless of price, so it can add to an overvalued position or deepen concentration risk if a single holding already dominates your portfolio. If you need the dividends for living expenses, reinvesting defeats the purpose. And in a taxable account, reinvesting still triggers a tax bill each year. In those cases, taking the cash and directing it elsewhere — or rebalancing — can be the better choice.