What does a DRIP calculator show?
A dividend reinvestment plan (DRIP) uses each dividend to buy more of the same shares instead of paying it out. Those new shares earn the next dividend, which buys more shares again, so both the share count and the income grow even if you never add money. This calculator runs that payment by payment and puts it next to the same holding taking every dividend as cash.
On the default inputs, $10,000 buys 200 shares at $50. The shares pay $2.00 a year in four payments, and you assume the dividend grows 5% a year and the price 4% a year. After 20 years the reinvested holding has 468.73 shares worth $51,352. The cash route still has 200 shares, worth $21,911, plus $13,226 of dividends received, $35,138 in all. Reinvesting comes out $16,215 ahead on these assumptions.
The income gap is wider than the value gap. In year 20 the reinvested shares pay $2,301.52, against $1,010.78 for the holding that took cash: 2.28 times as much, from the same $10,000.
How does dividend reinvestment compound, step by step?
At each payment the calculator does three things: dividend received = shares held x the dividend per share for that payment; shares bought = dividend received / the share price that day; shares held = old shares + shares bought. The price on payment day and the dividend per share both follow the growth rates you enter.
With both growth rates at zero, the arithmetic has a closed form you can check by hand. A 4% yield paid quarterly adds 1% to the share count every quarter, so after 10 years the share count is 200 x 1.01^40 = 297.77. At an unchanged $50 price the holding is worth $14,888.64, compared with $14,000 for the cash route ($10,000 of shares plus $4,000 of dividends). That $888.64 is dividends earned on reinvested dividends, the same compounding idea as interest on interest.
Open Show the working for your inputs, and the yearly table under the calculator for the share count and value at the end of each year.
Why are dividend growth and price growth assumptions?
Nobody knows how a dividend or a share price will move over 20 years. Dividends are raised, held, cut or suspended; prices rise and fall. The two growth rates here are inputs for you to test, and the result is only as reliable as they are. Holding everything else at the default:
| Assumption changed | Value after 20 years | Shares held | Dividends in year 20 |
|---|---|---|---|
| Default: dividend +5%, price +4% | $51,352 | 468.73 | $2,301.52 |
| Dividend growth 0% | $37,967 | 346.55 | $685.19 |
| Dividend growth 8% | $68,203 | 622.54 | $5,116.50 |
| Price growth 0% | $37,099 | 741.98 | $3,524.45 |
| Price growth 8% | $84,003 | 360.45 | $1,796.79 |
Notice the price rows. A flat price leaves the holding worth less, yet it ends with more shares and more income, because every dividend buys shares cheaply. A fast-rising price does the opposite. Reinvesting is a share-count story as much as a value story, and the two can pull in different directions.
Whole shares or fractional shares?
Some plans and platforms buy fractions of a share with each dividend; others buy only whole shares and hold the leftover cash until there is enough for another one. Turn on Buy whole shares only to see the difference. Leftover cash waits, earns nothing, and joins the next dividend.
On the default inputs the whole-share rule ends with 467 shares and $51,217.87, against 468.73 shares and $51,352.27 with fractions, a gap of $134.40 over 20 years. The gap grows when the share price is high relative to each dividend, because more cash sits idle between purchases.
Does monthly or quarterly payment make a difference?
A little. The sooner a dividend is reinvested, the sooner the new shares start earning. Keeping the yearly dividend at $2.00 and the other defaults:
- paid once a year: $50,066.88 after 20 years;
- paid quarterly: $51,352.27;
- paid monthly: $51,652.63.
Monthly payment adds $1,585.74 over yearly payment across 20 years. The dividend rate and its growth matter far more than the schedule.
What happens with tax, or extra money each year?
Tax. In many countries a reinvested dividend is taxed as if it had been paid to you, and tax may also be withheld at source. Only the money left after tax buys shares. With 15% taken from every dividend, the default holding ends at $45,219.63 instead of $51,352.27, with $1,730.08 of income in year 20. Each reinvested dividend is also a new purchase with its own cost, which matters when you later sell; keep the records your platform provides.
Extra money. Adding $1,200 at the end of each year, bought at that year's price in both columns, takes the reinvested holding to $110,348.43 from $34,000 paid in over 20 years. The cash route on the same additions reaches $84,226.33 including the dividends taken.
Worked examples in pounds and euros
- Pounds, paid twice a year. £5,000 invested at £4.20 buys 1,190.48 shares. With a dividend of 19p a share a year in two payments, and assumptions of 3% dividend growth and 2% price growth, reinvesting for 15 years ends with 2,416.65 shares worth £13,660.49. Year 15 dividends come to £668.83, against £342.13 had the dividends been taken as cash.
- Euros, paid monthly. €20,000 at €32.50 buys 615.38 shares. At €1.32 a share a year paid monthly, with 4% dividend growth and 3% price growth assumed, 25 years of reinvesting reach €128,695.83, with €6,228.61 of dividends in the final year, 2.99 times the €2,082.19 the cash route receives.
Switch the currency selector to see the same layout in any of 24 currencies; nothing is converted.
What if the share price falls?
Reinvesting cushions a falling price but does not undo it. Take the default holding with a flat $2.00 dividend and a price that falls 5% a year. After 10 years the price is about $29.94, and reinvesting has grown the share count from 200 to 337.24, worth $10,095.97. The cash route holds 200 shares worth $5,987.37 plus $4,000 of dividends, $9,987.37. Both are near the starting $10,000, and that is only because the dividend was assumed to hold steady. A business whose price falls for a decade often cuts its dividend too, and then both columns end lower.
Common DRIP mistakes
- Reading the result as a forecast. It is arithmetic on growth rates you chose.
- Entering one payment as the yearly dividend. A $0.50 quarterly payment is $2.00 a year.
- Forgetting tax. Reinvested dividends are usually still taxable income in the year they are paid.
- Putting too much into one company. Reinvesting into a single share steadily increases how much of your money depends on it.
- Ignoring costs. Some plans charge for each purchase or buy at a set price on a set day.
What this calculator leaves out, and a glossary
It assumes a smooth path for the price and the dividend, reinvests at the price on each payment date, and charges no dealing costs. It does not model dividend cuts, special dividends, share splits, currency movements, or the tax on a later sale. For the yield and income on a holding today, use the dividend calculator; for steady investing on a schedule, see the dollar-cost averaging calculator. Our guide to dividend reinvestment plans covers how plans operate.
DRIP: a dividend reinvestment plan, which uses dividends to buy more shares. Dividend per share: cash paid on each share. Fractional share: part of one share, bought with an amount smaller than the share price. Dividend growth rate: the yearly rise in the dividend per share. Accumulation fund: a fund share class that keeps its income inside the fund instead of paying it out.
Frequently asked questions
What is a DRIP?
A dividend reinvestment plan uses each cash dividend to buy more shares of the same company or fund. The extra shares receive future dividends, so the holding and its income grow without new money being added.
How much will $10,000 grow to with dividends reinvested?
It depends on the yield and on growth you cannot know in advance. At a 4% starting yield paid quarterly, with the dividend assumed to grow 5% and the price 4% a year, $10,000 reaches about $51,352 after 20 years, compared with $35,138 if the dividends are taken as cash.
Is it better to reinvest dividends or take the cash?
Reinvesting gives the holding more shares and more future income; taking cash gives you money to spend or to invest elsewhere. Which suits you depends on your needs, your tax position and how much you want to hold of that one investment.
How do I calculate dividend reinvestment by hand?
At each payment, multiply the shares held by the dividend per share, divide by the share price that day, and add the result to the shares. With a flat price and dividend, shares grow by (1 + yield / payments a year) each payment: 200 x 1.01^40 = 297.77 for 10 years at a 4% yield paid quarterly.
Are reinvested dividends taxed?
In many countries, yes: the dividend counts as income when it is paid even though you never receive the cash. Rules differ by country and account, and some tax-advantaged accounts shelter dividends. Use the optional tax field to apply one flat rate.
What is the difference between whole and fractional share reinvestment?
Fractional reinvestment spends the whole dividend at each payment. Whole-share reinvestment buys only complete shares and carries the leftover cash to the next payment. On the default inputs, whole shares end $134.40 lower after 20 years.
Why does a lower share price give more shares?
Each dividend buys shares at the price on the payment date, so a lower price buys more of them. The holding can be worth less while still owning more shares and paying more income.
Does the calculator predict dividend growth?
No. Dividend growth and price growth are assumptions you enter, and the page holds no market data. Try several rates, including zero and negative ones, to see the range of outcomes.
Can I use this DRIP calculator in pounds, euros or dirhams?
Yes. Choose from 24 currencies. Symbols and decimals follow the currency you choose, and amounts are never converted.
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Last reviewed 13 November 2026 by the NIFM Academy editorial team. Next review by 13 November 2027.
- Dividend reinvestment arithmetic, shares bought at each payment = shares held x dividend per share x (1 - tax) / price on that date; with flat price and dividend, shares x (1 + yield / payments a year)^(payments), shown in the working under every result. Checked 13 November 2026.