Dividend DRIP Calculator — Reinvestment Growth Model

This free dividend reinvestment (DRIP) calculator models how automatically reinvesting dividends grows your portfolio over time. It accounts for share price growth, dividend yield, dividend growth rate, and fresh capital contributions.

What is a Dividend DRIP?

A Dividend Reinvestment Plan (DRIP) automatically uses dividend payouts to purchase additional shares of the same stock or fund instead of paying cash. Over time, this creates a compounding effect: more shares generate more dividends, which buy even more shares. This calculator models that accumulation using a constant share price to isolate the effect of dividend growth and reinvestment — it does not project share price appreciation.

Calculator Inputs

• Starting Principal ($) — the initial investment amount
• Average Share Price ($) — used to calculate your starting share count and the cost of reinvested shares (held constant throughout the projection)
• Starting Yield (%) — current annual dividend as a percentage of share price
• Annual Dividend Growth Rate (%) — how fast the dividend per share grows each year
• Annual Contribution ($) — fresh capital added each year to buy more shares
• Time Horizon (Years) — projection length

Calculator Outputs

The calculator shows two summary metrics: Projected Annual Income (the estimated dividend income you would receive in the final year) and Total Shares Accumulated (initial shares plus all shares bought through DRIP reinvestment and fresh contributions). The bar chart shows how annual dividend income grows year by year as you accumulate more shares.

Example: $25,000, 3.5% Yield, 5% Dividend Growth, 15 Years

Starting with $25,000 at a share price of $100 (250 shares), a 3.5% dividend yield, 5% annual dividend growth, and $6,000 per year in fresh contributions reinvested at the same constant price: after 15 years you accumulate approximately 1,878 shares and generate roughly $13,011 per year in projected annual dividend income. Share count growth compounds because each additional share earns dividends that purchase yet more shares.

Frequently Asked Questions

Why does this calculator hold share price constant?

Holding price constant isolates the compounding effect of dividend reinvestment and dividend growth from share price appreciation. This makes it easier to see how the DRIP mechanism itself builds income over time. In reality, share prices fluctuate — a rising price would mean each dividend buys fewer new shares, while a falling price buys more.

How does DRIP compounding differ from interest compounding?

With a DRIP, reinvested dividends buy new shares which then themselves pay dividends, creating compounding. Unlike savings account interest, the dividend amount also grows if the company raises its dividend per share over time, adding a second layer of growth.

Are dividends taxed even if reinvested?

In most jurisdictions, yes — dividends are taxable income in the year they are paid, even if automatically reinvested. This calculator does not model taxes. Consult a tax adviser for personalised guidance.

What is a good dividend growth rate?

Dividend Aristocrats (S&P 500 companies with 25+ years of consecutive dividend increases) have averaged around 5–7% annual dividend growth historically.