Dividend Reinvestment (DRIP) Calculator

What DRIP means in this model

Dividend reinvestment uses a dividend to buy additional shares. This DRIP calculator compares immediate reinvestment with retaining the same scenario's dividends as cash. It does not select securities or predict their performance. Both scenarios use the same starting investment, price assumptions and external contributions.

Enter starting investment, starting share price, initial dividend yield, assumed annual dividend growth, assumed annual share-price growth and 1–50 whole years. Optional monthly investment starts at zero. The reinvestment switch selects the emphasized result and income-goal scenario; both wealth totals remain visible.

Investor.gov explains dividend reinvestment plans (opens in a new tab) and notes that actual plan fees and execution arrangements can differ. This model simplifies those arrangements to the explicit monthly convention below.

Total wealth and contribution accounting

DRIP share value = ending shares × ending price; its dividend cash is zero under immediate reinvestment, so total wealth equals share value. Without DRIP, total wealth = share value + all accumulated dividend cash. That cash remains in the scenario and earns no interest.

Modeled total-wealth difference = DRIP total wealth − no-DRIP total wealth. It may be negative under some assumptions and is not a guarantee that reinvestment improves results. Cumulative dividends are tracked independently for each scenario; DRIP's additional shares can generate different dividend totals. These totals are already represented by shares or cash and must not be added to wealth again.

Later cash contributions = monthly contribution × modeled months. Total external capital = starting investment + later cash contributions. Reinvested dividends are not external contributions. No artificial additive attribution between price growth and dividend growth is made.

Dividend run-rate and income-goal timing

Modeled annual dividend run-rate = current shares × current annual dividend per share. Monthly equivalent = annual run-rate / 12. These are point-in-time rates, not actual monthly payments or dividends already received during the prior year.

The optional dividend income goal converts the entered monthly-equivalent target to annual target ×12, then scans the starting position and every monthly engine row until the selected scenario's annual run-rate reaches or exceeds it. The maximum is 50 years / 600 months, independent of the displayed investment period; the same contributions continue across that search horizon.

Already reached, first crossing and not reached within the horizon are distinct results. A numeric-limit stop is reported separately from an unreached target. No infinite extrapolation is used. A first crossing does not establish that the run-rate remains above the target if growth is negative.

Chart and year-by-year table

Both chart lines use total wealth, including no-DRIP dividend cash. At most 121 points are sampled for the native SVG; every month remains in the calculations. The collapsed annual table gives the starting position and each year-end row from that same projection, with share price, shares, dividend cash, wealth and DRIP annual run-rate. It also provides a numeric alternative to the chart.

Worked example

The editable example uses $10,000 at $50/share, giving 200 starting shares. Initial yield 4% gives $2 annual dividend/share. Assumed annual dividend growth is 5%, assumed annual share-price growth 6%, period 20 years and monthly contribution zero. These assumptions do not represent a suggested investment.

After 240 modeled months, price is $160.36 and annual dividend/share $5.31 (display-rounded). With DRIP, approximately 413.917272 shares have modeled wealth $66,374.44. Without DRIP, 200 shares are worth $32,071.35 and retained dividend cash is $13,581.93, giving total wealth $45,653.28. The modeled total-wealth difference is $20,721.16.

DRIP annual dividend run-rate is $2,196.49; monthly equivalent $183.04. No-DRIP annual run-rate is $1,061.32; monthly equivalent $88.44. Cumulative modeled dividends are $21,339.19 with DRIP and $13,581.93 without. All arithmetic retains unrounded values.

Dividend reinvestment FAQ

What is dividend reinvestment (DRIP)?

It uses dividends to purchase more shares. Here it means immediate fractional-share purchases at each modeled month's price, an explicit simplification of actual plans.

How is the starting dividend per share calculated?

Starting price multiplied by initial yield as a decimal gives annual dividend per share. At $50 and 4%, that is $2 per share annually before subsequent modeled growth.

Does the calculator keep dividend yield constant?

No. It initializes dividend per share from yield, then grows price and dividend per share independently. Their ratio determines the future modeled yield.

How is dividend growth modeled?

Annual dividend per share changes each month by (1 + annual growth)^(1/12). Negative, zero and positive assumptions are supported within bounds. This does not predict a company's dividend decisions.

How is share-price growth modeled?

The price follows its own equivalent monthly growth factor. It is a deterministic price-only path, not a total-return assumption or a simulation of volatility and ex-dividend price changes.

What happens to dividends when DRIP is turned off?

They accumulate as cash earning zero interest. No-DRIP wealth includes both shares and this cash. The switch changes emphasis and the income-goal scenario, while preserving the comparison.

Does the calculator assume fractional shares?

Yes, for starting investment, monthly contributions and reinvested dividends. Actual account or security restrictions are not modeled.

When are monthly contributions invested?

After that month's price and dividend-per-share growth, before the dividend is calculated. Contribution-purchased shares therefore receive that month's modeled dividend in both scenarios.

What does the monthly dividend-income goal mean?

It is one-twelfth of an annual run-rate, not a promised monthly payment. The selected scenario is searched from month zero through month 600 for the first crossing; it may later fall below the target.

Does this projection include taxes, fees or guaranteed returns?

No. It excludes taxes and fees and does not guarantee dividends, dividend growth or price growth. Results illustrate entered assumptions and may differ materially from actual outcomes.

Model review and sources

Reviewed September 27, 2026 against the monthly engine, event order, accounting invariants and independent fixtures. Investor.gov educational pages linked above support the general reinvestment and risk explanations; they do not endorse the model, sample assumptions or outputs. No live-market dataset is used.

Compound Interest Milestone is a related tool for exploring a separate balance target under a different stated compounding convention. It does not replace this dividend/share model, and its presence is not a recommendation to invest.