DRIP Calculator
See how dividend reinvestment compounds your wealth. Compare total return with and without DRIP.
Your Investment
Annual Dividend Income at End of Period
āYear-by-Year Breakdown
| Year | Shares | Share Price | Dividends Paid | Portfolio Value |
|---|
Want to build the optimal DRIP strategy for your situation?
Find a Dividend-Focused Advisor āWhat Is a DRIP and How Does It Work?
A DRIP (Dividend Reinvestment Plan) automatically uses your dividend payments to purchase additional shares of the same stock, rather than paying cash to you. Instead of receiving $3.50 per share in dividend income, those dollars immediately buy fractional new shares at the current market price.
The compounding effect is dramatic over long periods. As you accumulate more shares, each subsequent dividend payment is larger, because a higher share count receives more dividends, which purchases even more shares. This feedback loop is why Warren Buffett famously described compound interest as the "eighth wonder of the world."
Most brokers (Fidelity, Schwab, Vanguard, TD Ameritrade) offer free DRIP enrollment on eligible dividend-paying stocks and ETFs. You can usually enable it per holding in your account settings.
DRIP vs. Taking Cash Dividends: Which Is Better?
For investors in the accumulation phase (not yet needing income), DRIP almost always produces higher total returns because it forces consistent reinvestment regardless of market conditions, you automatically buy more shares when prices drop, lowering your average cost. For retirees who need dividend income to cover expenses, taking dividends as cash is the right approach. A financial advisor can help you decide when to switch from DRIP to income mode.