Dividend Reinvestment Calculator
See how reinvesting dividends compounds into more shares over time, and how much more it builds than taking the dividends as cash.
| Year | Reinvested | Taken as cash |
|---|---|---|
| 1 | $10,800 | $10,800 |
| 2 | $11,664 | $11,640 |
| 3 | $12,597 | $12,522 |
| 4 | $13,605 | $13,448 |
| 5 | $14,693 | $14,421 |
| 6 | $15,869 | $15,442 |
| 7 | $17,138 | $16,514 |
| 8 | $18,509 | $17,639 |
| 9 | $19,990 | $18,821 |
| 10 | $21,589 | $20,062 |
| 11 | $23,316 | $21,365 |
| 12 | $25,182 | $22,734 |
| 13 | $27,196 | $24,170 |
| 14 | $29,372 | $25,679 |
| 15 | $31,722 | $27,263 |
| 16 | $34,259 | $28,926 |
| 17 | $37,000 | $30,672 |
| 18 | $39,960 | $32,506 |
| 19 | $43,157 | $34,431 |
| 20 | $46,610 | $36,453 |
How it's calculated
A dividend reinvestment plan, or DRIP, uses each dividend to buy more shares automatically instead of paying it out as cash. Those new shares pay their own dividends, which buy still more shares. It is compounding applied to dividends, and over decades it makes a large difference.
Take the default. A $10,000 investment with a 3 percent dividend yield and 5 percent price growth over 20 years. Reinvesting the dividends grows it to about $46,610. Taking the same dividends as cash, the shares grow to about $26,533 and the cash dividends add up to $9,920, for $36,453 in total. Reinvesting is worth about $10,157 more, even though the dividends paid were the same.
The edge comes entirely from compounding the dividends rather than letting them sit. The longer the horizon and the higher the yield, the bigger the gap. This models a steady yield and price growth, so real markets will be bumpier, but the lesson holds. Reinvested dividends are a quiet, powerful driver of long-term returns.
Assumptions
- Reinvested, the balance compounds at the price growth plus the dividend yield. Taken as cash, the shares appreciate and the dividends accumulate without growth.
- Uses a steady yield and price growth. It does not model taxes, which apply to dividends in a taxable account even when reinvested.
Last updated: 2026-08-08
These assumptions follow our general methodology.
Frequently asked questions
What is a DRIP?
A dividend reinvestment plan automatically uses your dividends to buy more shares instead of paying cash. Many brokers and companies offer it for free, often including fractional shares, so every cent of the dividend goes back to work.
Should I reinvest my dividends?
While you are building wealth, usually yes. Reinvesting compounds your returns and takes no effort. Once you are living off the portfolio, you might switch to taking dividends as income instead.
How much do reinvested dividends add?
More than most people expect. Over long periods, reinvested dividends have historically made up a large share of the total return of the stock market. The exact amount depends on the yield and how long you stay invested.
Are reinvested dividends taxed?
In a taxable account, yes. A dividend is taxed in the year it is paid even if you reinvest it, so you owe tax without receiving cash. In a tax-advantaged account like an IRA or 401(k), reinvested dividends are not taxed as they go.