Dividend Calculator with Reinvestment (DRIP)
How much a dividend portfolio pays and grows to, with dividends reinvested or taken as cash, in dollars, pounds, euros or any currency.
$10,000 plus $500 a month, at a 3.5% dividend yield growing 6% a year and a share price growing 5% a year, grows to about $379,079 in 20 years with dividends reinvested, and pays about $14,666 in dividends in year 20 ($1,222 a month). You put in $130,000.
The words on this page, explained simply
New to this? Here is what each term means, in plain English.
- Dividend yield
- Yearly dividends per share as a percentage of the share price. A 3 dividend on a 100 share is a 3% yield.
- DRIP (dividend reinvestment)
- Using each dividend to buy more shares, which then pay their own dividends.
- Dividend growth
- How fast the dividend per share rises each year. It is not guaranteed; companies can cut dividends.
- Yield on cost
- This year's dividends as a percentage of what you originally paid, which rises as dividends grow.
- Tax on dividends
- Tax deducted from each dividend, such as 15% US withholding for many non-US investors. Tax-free accounts (IRA, ISA, TFSA) usually pay 0%.
A dividend is cash a company or fund pays out of its profits, usually every quarter. Reinvesting it (a DRIP, dividend reinvestment plan) buys more shares, which pay more dividends next time: the dividend version of compound interest.
Enter what you start with, what you add each month, the dividend yield and how fast you expect the dividend and the share price to grow. The second box answers the reverse question: how much you need invested for a given monthly income.
How the calculator works
Month by month: the share price grows at your price-growth rate, each monthly contribution buys shares at that month's price, and at the end of every payment period (quarterly by default) all the shares you hold pay a dividend. The dividend per share is fixed for each year and rises by your dividend-growth rate at the start of the next. With DRIP on, each dividend, after any tax you enter, buys more shares at the current price.
Dividend yield = yearly dividends per share ÷ share price. Yield on cost = this year's dividends ÷ the money you put in, which rises over time when dividends grow faster than you add money.
Reinvesting versus taking the cash
| $10,000 + $500/month, 20 years | Final value | Dividends in year 20 |
|---|---|---|
| Dividends reinvested | $379,079 | $14,666 |
| Dividends taken as cash | $308,995 | $9,066 |
| $10,000 only, reinvested | $55,649 | $2,166 |
Assumptions: 3.5% yield, dividends growing 6% and the price 5% a year, paid quarterly, no tax. With cash, the dividends are counted in the final value but earn nothing; reinvested, they keep buying shares that pay their own dividends.
How much do you need for a dividend income?
Capital needed = yearly income wanted ÷ dividend yield. $1,000 a month is $12,000 a year: at a 4% yield that takes $300,000 invested; at 3%, $400,000. A higher yield needs less capital, but very high yields often come from companies whose dividend is at risk or from option-income funds whose payouts vary.
Tax on dividends
Tax rules depend on where you live and the account the shares sit in. Common cases: US qualified dividends are taxed at 0%, 15% or 20%; many non-US investors have 15% withheld on US dividends under a tax treaty; dividends inside an IRA, 401(k), UK ISA or Canadian TFSA are usually not taxed as they arrive. Enter the percentage that applies to you; the calculator takes it from each dividend before it is reinvested.
Key takeaways
- Dividend yield = yearly dividend per share ÷ share price.
- Reinvesting dividends buys shares that pay their own dividends: income and value compound.
- Capital needed for an income = yearly income ÷ yield ($12,000 at 4% = $300,000).
- Dividends and their growth are not guaranteed; companies cut them in bad years.
Frequently asked questions
How do I calculate dividend income?
Multiply the number of shares by the dividend per share. 200 shares paying $3 a year each earn $600 a year. Using the yield instead: amount invested × yield, so $20,000 at a 3% yield earns $600 a year.
What is a DRIP?
A dividend reinvestment plan: instead of paying the dividend in cash, the broker or company uses it to buy more shares, often fractional and commission-free. Over decades it can account for a large part of a stock's total return.
How much do I need to invest to make $1,000 a month in dividends?
About $300,000 at a 4% yield, $400,000 at 3% and $240,000 at 5%, before tax: $12,000 a year divided by the yield.
Is it better to reinvest dividends?
For growth, usually yes. In the example above, reinvesting gives $379,079 after 20 years against $308,995 with the dividends taken as cash. If you need the income to live on, taking the cash is the point of owning dividend stocks.
What is yield on cost?
This year's dividends divided by what you originally paid. A stock bought at a 3% yield whose dividend has since doubled pays a 6% yield on cost, even if the current yield for a new buyer is still 3%.
Does this work for ETFs like SCHD, VYM or VOO?
Yes. Enter the fund's current yield and your own assumptions for dividend and price growth. Past dividend growth is a guide, not a promise.