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Dividend Reinvestment (DRIP) Calculator

Monthly Quarterly Annually

Projection Summary

Ending Portfolio Value:

$0.00

Total Shares Owned:

0

Total Dividends Received:

$0.00

Annual Income at End:

$0.00
function calculateDRIP() { var price = parseFloat(document.getElementById('currentPrice').value); var shares = parseFloat(document.getElementById('shareCount').value); var yield = parseFloat(document.getElementById('divYield').value) / 100; var growth = parseFloat(document.getElementById('annualGrowth').value) / 100; var frequency = parseInt(document.getElementById('frequency').value); var years = parseInt(document.getElementById('years').value); var monthlyAdd = parseFloat(document.getElementById('monthlyCash').value); if (isNaN(price) || isNaN(shares) || isNaN(years)) { alert("Please enter valid numbers"); return; } var totalDividends = 0; var currentShares = shares; var currentPrice = price; var totalPeriods = years * frequency; // Period rates var periodGrowth = growth / frequency; var periodYield = yield / frequency; var cashPerPeriod = (monthlyAdd * 12) / frequency; for (var i = 1; i <= totalPeriods; i++) { // 1. Calculate dividend for this period var dividendPayment = currentShares * (currentPrice * periodYield); totalDividends += dividendPayment; // 2. Reinvest dividend + additional cash var totalToInvest = dividendPayment + cashPerPeriod; var newShares = totalToInvest / currentPrice; currentShares += newShares; // 3. Stock appreciation at end of period currentPrice = currentPrice * (1 + periodGrowth); } var finalVal = currentShares * currentPrice; var finalAnnualIncome = currentShares * (currentPrice * yield); document.getElementById('finalValue').innerText = "$" + finalVal.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('finalShares').innerText = currentShares.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('totalDivs').innerText = "$" + totalDividends.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('finalIncome').innerText = "$" + finalAnnualIncome.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('results-box').style.display = 'block'; }

How Does Dividend Reinvestment (DRIP) Work?

A Dividend Reinvestment Plan (DRIP) is a powerful wealth-building strategy where the cash dividends paid by a company are automatically used to purchase more shares of the company's stock. Instead of receiving a check or cash in your brokerage account, those funds are funneled back into your investment.

The Power of Compounding Shares

While most people focus on the compounding of the dollar amount, DRIP focuses on the compounding of the quantity. As you acquire more shares through reinvestment, your next dividend payment is calculated based on a larger share count, which in turn buys even more shares. This create a "snowball effect" that can significantly outperform simple price appreciation over long periods.

Key Components of the Calculator

  • Annual Dividend Yield: The percentage of the stock price that the company pays out in dividends annually.
  • Expected Annual Growth: The estimated percentage increase in the stock's price per year.
  • Distribution Frequency: Most blue-chip stocks pay dividends quarterly, while some REITs or ETFs pay monthly.
  • Monthly Contribution: Adding extra capital alongside your reinvested dividends accelerates the process exponentially.

A Realistic Example

Imagine you start with 100 shares of a stock priced at $50 ($5,000 initial investment). The stock has a 4% dividend yield and you expect the price to grow by 5% annually. If you contribute an additional $100 per month:

  1. After 10 Years: Your portfolio could grow to over $28,000, with your share count increasing from 100 to over 350 shares.
  2. After 20 Years: The snowball effect kicks in. You could end up with over $85,000 and a share count exceeding 700.
  3. Dividend Income: Your annual passive income would rise from $200 in Year 1 to nearly $3,500 in Year 20, purely from the growth in shares and price.

Why Use a DRIP Strategy?

The primary advantage of DRIP is Dollar Cost Averaging. Because your dividends are reinvested regardless of whether the market is up or down, you naturally buy more shares when prices are low and fewer when prices are high. Over time, this lowers your average cost basis and reduces the emotional stress of market volatility.

Pro Tip: Many brokerages allow for "Fractional Share Reinvestment," meaning even a $10 dividend can buy 0.1 shares of a $100 stock, ensuring every penny is working for you immediately.

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