DRIP Calculator
Project portfolio growth and dividend income with reinvested dividends, growth, and taxes.
A DRIP calculator projects how a dividend stock or fund grows when every dividend is automatically reinvested into more shares. It combines the starting investment, dividend yield, dividend growth, share-price growth, monthly contributions and dividend taxes to show portfolio value, annual dividend income, and the advantage over taking dividends in cash.
DRIP Calculator
Investment & Dividends
Dividends are paid annually and reinvested after tax at that year's share price. Set tax to 0 for an IRA or 401(k).
Based on your results — what to do next:
Model a single dividend stock
Your final-year income of $13,598 depends on yield and growth. Stress-test the payout inputs.
Does this fund your retirement?
A $337,068 portfolio yielding $1,133/mo is one building block of a retirement income plan.
Know the tax on selling
Your gain of roughly $252,068 will be taxed when sold outside an IRA.
How Dividend Reinvestment (DRIP) Growth Is Calculated
① Annual dividends
Dividends = Shares × DPS
DPS (dividend per share) starts at Price × Yield and grows each year
② Reinvestment
New shares = Dividends × (1 − Tax) ÷ Share price
After-tax dividends buy more shares, which pay more dividends next year
③ Growth of price and payout
Pricet+1 = Pricet × (1 + gp); DPSt+1 = DPSt × (1 + gd)
Portfolio value = Shares × Price
| Variable | Meaning | Typical Value |
|---|---|---|
| Yield | Starting dividend yield | 1–5% for most dividend payers |
| gd | Dividend growth rate | Dividend growers: 5–10% |
| gp | Share price growth | Historic equities ~5–8% |
| Tax | Dividend tax rate | 0–20% federal, 0% in an IRA |
Worked Example — $10,000 + $250/mo, 3.5% yield, 6% dividend growth, 5% price growth, 25 years, 15% tax
- Starting shares: 100 at $100
- After 25 years the portfolio is worth roughly $337,000 with about 995 shares
- Taking dividends in cash instead leaves roughly $253,000 in total — a DRIP advantage of about $84,000
- Total contributed: $85,000
💡 Pro-Tip
Dividend growth beats starting yield. A 2.5% yield growing 10% a year can out-earn a flat 5% yield within a decade, and reinvesting in a tax-advantaged account removes the tax drag shown here. Set the tax rate to 0 to model a Roth IRA or 401(k).
DRIP Calculator FAQ
What does DRIP stand for?
DRIP means dividend reinvestment plan: dividends are automatically used to buy more shares of the same stock or fund, often fractional shares and sometimes commission-free.
Are reinvested dividends taxed?
In a taxable account, yes — reinvested dividends are taxed in the year they are paid even though you did not receive cash. In an IRA or 401(k) they grow tax-deferred or tax-free.
Is DRIP better than taking cash dividends?
For long-term growth, usually yes, because compounding buys more shares. Retirees who need income may prefer cash.
What is yield on cost?
Yield on cost is current annual dividends divided by the total amount you invested. With dividend growth and reinvestment it can climb far above the starting yield.
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