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Dividend Reinvestment (DRIP) Calculator

Estimate the long-term wealth generated by compounding dividends and capital gains.

The Power of Dividend Reinvestment (DRIP)

A Dividend Reinvestment Plan (DRIP) is a powerful wealth-building strategy where the dividends paid out by a stock are automatically used to purchase more shares of that same company. Over time, this creates a “snowball effect” that can significantly outperform simple price appreciation.

How It Works

When you reinvest dividends, you increase the number of shares you own. In the next dividend cycle, you receive dividends on both your original shares and the new shares purchased with the previous dividend. When you combine this with capital appreciation (the stock price going up) and annual dividend growth, the compounding math becomes exponential.

Key Factors in the Calculation

• Dividend Yield: The annual percentage paid out by the company relative to its share price.
• Price Growth: The expected annual percentage increase in the stock’s market value.
• Dividend Growth: How much the company increases its dividend payment each year (common for “Dividend Aristocrats”).
• Monthly Contributions: Regular additions to the principal that accelerate the acquisition of more dividend-producing assets.

Real-World Example

Imagine you start with $10,000 in a stock with a 4% yield and 5% annual price growth. Without reinvesting dividends, after 20 years, your portfolio would be worth roughly $26,532. However, if you reinvest those dividends, your portfolio value jumps to nearly $56,000—more than doubling the gain simply by putting the cash back to work.

function calculateDRIP() {
var initial = parseFloat(document.getElementById(“initialInvestment”).value) || 0;
var monthly = parseFloat(document.getElementById(“monthlyDeposit”).value) || 0;
var yieldPct = (parseFloat(document.getElementById(“divYield”).value) || 0) / 100;
var growthPct = (parseFloat(document.getElementById(“stockGrowth”).value) || 0) / 100;
var divGrowthPct = (parseFloat(document.getElementById(“divGrowth”).value) || 0) / 100;
var years = parseInt(document.getElementById(“years”).value) || 0;
var totalMonths = years * 12;
var currentBalance = initial;
var totalInvested = initial;
var currentYield = yieldPct;
for (var i = 1; i <= totalMonths; i++) {
// Monthly growth (geometric mean approx)
var monthlyGrowthRate = Math.pow(1 + growthPct, 1/12) – 1;
var monthlyYieldRate = currentYield / 12;
// Apply price growth
currentBalance = currentBalance * (1 + monthlyGrowthRate);
// Add dividends (reinvested)
var dividendAmount = currentBalance * monthlyYieldRate;
currentBalance += dividendAmount;
// Add monthly contribution
currentBalance += monthly;
totalInvested += monthly;
// Update dividend yield for growth annually
if (i % 12 === 0) {
currentYield = currentYield * (1 + divGrowthPct);
}
}
var annualIncome = currentBalance * currentYield;
document.getElementById("totalValue").innerText = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(currentBalance);
document.getElementById("annualIncome").innerText = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(annualIncome);
document.getElementById("totalInvested").innerText = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD' }).format(totalInvested);
document.getElementById("results").style.display = "block";
}