DRIP Calculator: Dividend Reinvestment Projections
See how reinvesting dividends through a DRIP compounds your portfolio over time. Compare reinvesting vs taking cash and discover the true power of dividend compounding.
Compound Growth
Reinvested dividends buy more shares, which generate more dividends, creating exponential growth.
Quarterly Reinvestment
Most DRIPs reinvest every quarter, so your money compounds four times per year automatically.
Snowball Effect
Small early reinvestments become massive over decades. Year 20 dividends dwarf year 1 dividends.
Portfolio Value: DRIP vs No DRIP
Watch the gap widen as reinvested dividends compound over time.
Year-by-Year Breakdown
| Year | Portfolio Value (DRIP) | Annual Dividend (DRIP) | Portfolio Value (No DRIP) | Annual Dividend (No DRIP) |
|---|---|---|---|---|
| 1 | $16,433.83 | $433.83 | $16,000.00 | $428.75 |
| 2 | $23,129.34 | $695.51 | $22,000.00 | $670.69 |
| 3 | $30,122.23 | $992.88 | $28,000.00 | $935.75 |
| 4 | $37,453.13 | $1,330.91 | $34,000.00 | $1,225.64 |
| 5 | $45,168.49 | $1,715.36 | $40,000.00 | $1,542.17 |
| 10 | $91,679.85 | $4,615.23 | $70,000.00 | $3,597.14 |
| 15 | $160,474.78 | $10,403.95 | $100,000.00 | $6,669.89 |
| 20 | $275,700.80 | $22,775.84 | $130,000.00 | $11,165.96 |
No-DRIP portfolio excludes dividends received as cash
How DRIP Works
What Is a Dividend Reinvestment Plan?
A DRIP (Dividend Reinvestment Plan) is a program that automatically reinvests your cash dividends into additional shares of the paying stock or fund. Instead of dividends landing in your account as cash, they purchase more shares, often including fractional shares, at no additional commission. Most major brokerages like Fidelity, Schwab, and Vanguard offer DRIP enrollment with a single click.
The Compounding Snowball
The magic of DRIP is compound growth. Each quarter, your dividends buy new shares. Next quarter, those new shares pay dividends too, buying even more shares. The effect starts small (barely noticeable in years 1-3) but accelerates dramatically over time. After 15-20 years, the compounding curve becomes steep. This is why long-term investors call it the "dividend snowball."
DRIP + Dividend Growth = Double Compounding
When you combine DRIP with stocks that increase their dividends annually (like Dividend Aristocrats), you get a double compounding effect. Not only are you accumulating more shares through reinvestment, but each share is paying a higher dividend every year. This is why the combination of DRIP and dividend growth stocks is one of the most powerful wealth-building strategies available to individual investors.
When to Turn Off DRIP
DRIP is optimal during the accumulation phase when you're building wealth. Once you transition to needing income (whether for retirement, supplementing your salary, or funding living expenses), it makes sense to switch off DRIP and start receiving dividends as cash. Many investors keep DRIP on in tax-advantaged accounts (IRA, 401k) while taking cash dividends in taxable accounts.
Track Your DRIP Returns Automatically
Connect your brokerage and see your real DRIP compounding in action. MerryDiv tracks every reinvested dividend and shows your actual income growth over time.
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Frequently Asked Questions
Disclaimer: This DRIP calculator is for educational and illustrative purposes only. Results are hypothetical projections based on the inputs you provide and assume constant dividend growth rates and yields over the time horizon. Actual investment returns, dividend yields, and growth rates vary and are not guaranteed. Dividends may be reduced or eliminated. Past performance does not guarantee future results. This is not financial advice. Consult a qualified financial advisor before making investment decisions.
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