DRIP Calculator
Project how reinvested dividends compound your portfolio over time.
Related tool
| Year | Portfolio (nominal) | Portfolio (real) | Capital invested | Gross divs / yr | Tax paid / yr | Net divs / yr | Monthly income | Cumul. net divs | Yield on cost | Eff. yield |
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What is DRIP investing?
DRIP stands for Dividend Reinvestment Plan. Instead of receiving your dividend payments as cash, a DRIP automatically uses those payments to purchase additional shares of the same stock or fund. This creates a powerful compounding cycle: more shares generate more dividends, which buy more shares, and so on.
Most major brokerages offer DRIP enrollment for free. Once enabled, the process is completely automatic — dividends are reinvested on the payment date without any action required from the investor. Some brokers even allow fractional share purchases through DRIP, ensuring every dollar of dividends is immediately put to work.
How to use this DRIP calculator
Start by entering your current portfolio value and any amount you plan to add each month. Then enter the annual dividend yield of your portfolio (for diversified ETFs like SCHD or VYM, this is typically 3–5%). The annual dividend growth rate is optional but important — it reflects how much the dividend per share grows each year, which for quality dividend-growth stocks historically runs 4–8%.
Finally, drag the slider to your intended investment horizon. The calculator computes month-by-month, reinvesting dividends each month and applying the dividend growth rate annually, giving you an accurate projection of your final portfolio value, total dividends received, and the annual income your portfolio would generate in the final year.
Why dividend growth rate matters
Most DRIP calculators ignore dividend growth rate — this one doesn't. A stock or fund that grows its dividend by 6% per year will double its per-share dividend in roughly 12 years. Applied to a growing portfolio, this means your annual income compounds far faster than a static yield would suggest. An investor starting with a 3.5% yield and 6% dividend growth will effectively be earning a much higher "yield on cost" a decade later, without any change in their original investment thesis.
DRIP vs. taking dividends as cash
Taking dividends as cash gives you immediate income — useful for retirees or those who need cash flow. Reinvesting (DRIP) maximises long-term growth by keeping all capital working. Over a 20+ year horizon, the difference between a DRIP investor and a cash-dividend investor with the same starting portfolio is typically substantial — often 40–80% higher terminal value, depending on yield and growth assumptions.
The calculator above shows the total dividend income earned regardless of reinvestment strategy, so you can compare both approaches with the same inputs.
Frequently asked questions
A DRIP calculator projects how your investment grows when dividends are automatically reinvested to buy more shares. It shows the compounding effect over time, accounting for your initial investment, regular contributions, dividend yield, and dividend growth rate.
Reinvested dividends purchase additional shares, which generate their own dividends, which are also reinvested. Over time, this creates exponential growth — your dividends earn dividends. The longer the time horizon, the more dramatic the compounding effect becomes.
For quality dividend-growth stocks and ETFs, annual dividend growth of 3–8% is typical. The S&P 500 dividend growth rate has averaged around 5–6% per year historically. Conservative projections use 3–4%; broad ETFs like SCHD or VYM justify 5–6%.
A yield between 3% and 5% is typically the DRIP sweet spot — high enough for meaningful reinvestment, low enough to avoid the yield traps that signal financial distress. Many successful DRIP investors prioritise dividend growth rate over current yield, as a growing dividend compounds more powerfully over time.
This "crossover point" depends on yield, dividend growth rate, and contribution amount. At a 4% yield with 5% annual growth and consistent monthly contributions, most investors see dividends exceed their monthly contributions within 15–25 years. The calculator above shows the crossover point for your specific inputs.