About this calculator
This calculator is for education only and does not constitute investment advice. A dividend reinvestment plan (DRIP) turns cash dividends into more shares, and those shares pay their own dividends the next year. Two growth engines run at once: the dividend per share grows, and the share count grows.
The model holds the share price flat for the whole period and reinvests every cent with no tax or fees. That is a simplification, stated openly: if the price rises, the same dividends buy fewer shares and the share-count curve bends down; if the price falls, they buy more. What never changes is the direction — reinvestment always beats taking the cash, as long as the dividend itself is maintained.
How to use it
- Enter shares held and the share price (the price is assumed flat — enter the current price).
- Enter the dividend yield and how fast you assume the dividend per share grows each year.
- Set the reinvestment years and read the table: income, reinvested shares and the growing total.
The formula
Year 1 already shows the loop: a $50 share at a 3% yield pays $1.50, grown one year at 5% to $1.575 per share, so 100 shares pay $157.50 and buy 3.15 more shares at the flat $50 price. Year 2 pays the grown dividend on 103.15 shares. The income growth result compares the final year's income with the first year's — it blends both engines, dividend growth and share-count growth, into one percentage. Taxes on dividends and plan fees are not modeled.
Worked example
100 shares at $50, a 3% yield growing 5% a year, reinvested for 10 years: year 1 pays $157.50 and adds 3.15 shares (103.15 total); by year 10 the holding is 147.46 shares paying $343.52 that year, and $2,373.21 of dividends has been reinvested in total. The final year's income is 118.1% above the first year's — from a dividend that grew only 5% a year, because the share count grew with it.
Sources: Dividend per share grown at a constant assumed rate; share price held flat by stated assumption; full reinvestment with no tax drag or fees. Past dividends do not guarantee future dividends. Last updated: October 2026.
Frequently asked questions
Why assume a flat share price?
Because the reinvestment math needs a price to convert income into shares, and any price path would be a guess. Flat is the neutral choice and it is labeled as an assumption: a rising price would buy fewer shares, a falling price more. The income column is unaffected by the price path only through the share count it produces.
Are dividend taxes included?
No. In taxable accounts dividends are usually taxed in the year received even when reinvested, which reduces the compounding. In a tax-advantaged account the model is closer to reality. Either way, treat the output as pre-tax.
What if the dividend is cut?
Then both engines stall: income falls immediately, and fewer shares are added. The model assumes the dividend grows every year without interruption — the single most optimistic assumption on the page, and the one to stress-test by lowering the growth rate.
DRIP vs taking the cash — which wins?
On income, reinvestment wins whenever the dividend is maintained, because the share count only grows one way. On flexibility, cash wins: reinvested shares cannot be spent without selling. The table quantifies the first half; the second half is a personal call.
What formula does this dividend reinvestment calculator use?
Dividend per share (year t) = price × yield × (1 + g)ᵗ; income(t) = shares(t−1) × dps(t); new shares = income(t) / price; shares(t) = shares(t−1) + new shares Year 1 already shows the loop: a $50 share at a 3% yield pays $1.50, grown one year at 5% to $1.575 per share, so 100 shares pay $157.50 and buy 3.15 more shares at the flat $50 price. Year 2 pays the grown dividend on 103.15 shares. The income growth result compares the final year's income with the first year's — it blends both engines, dividend growth and share-count growth, into one percentage. Taxes on dividends and plan fees are not modeled. The worked example on this page applies the formula step by step with real numbers, so you can verify the result by hand.