Dividend Reinvestment (DRIP) Calculator

See the mathematical difference between reinvesting your dividends and taking them as cash.

Initial Investment $
Annual Contribution $
Dividend Yield %
Annual Stock Growth %
Years to Grow Yrs
⚠️ Please enter valid positive numbers for the timeline and rates.
Final Value with DRIP
$0
Dividends automatically buy more shares
$0 Final Value
Cashing Out
$0 The "DRIP Snowball"
(Total Difference)
Portfolio Growth Comparison
DRIP Active
Cashed Out
Total Value
Years

What is a DRIP?

A Dividend Reinvestment Plan (DRIP) is an arrangement offered by corporations or brokerages that allows investors to automatically reinvest their cash dividends into additional or fractional shares of the underlying stock.

  • The Cash Out Scenario: If you take your dividends in cash, your original principal (and new contributions) will continue to grow based on the stock's price appreciation. However, the cash you pulled out sits flat.
  • The Reinvestment Scenario (DRIP): When you reinvest, you buy more shares. The next time a dividend is paid out, it is paid out on a higher share count, which buys even more shares, creating an accelerating snowball of wealth.
  • The Timeline Effect: In the first few years, the difference between cashing out and reinvesting looks small. However, due to the nature of exponential compounding, the gap explodes in size during decades two and three.