DRIP Calculator - Dividend Reinvestment & Compound Growth

Simulate the exponential compounding power of a Dividend Reinvestment Plan (DRIP). Compare portfolio total return, Yield on Cost (YoC), and annual dividend cash flow.

Advertisement
Responsive Leaderboard Ad Unit
⚙️ Configuration & Inputs
Initial principal investment
Regular recurring deposits
Current starting dividend yield (e.g. SCHD ~3.5%)
Dividend aristocrat payout growth CAGR
Underlying stock price capital growth
Total years to compound
📊 Results & Analysis
Portfolio Value (With DRIP) $497,240 +$142,580 more than taking cash dividends
Annual Dividend Income $23,415 / year $1,951 / month passive cash flow
Yield on Cost (YoC) 16.15% Total Invested: $145,000
Portfolio Without DRIP $354,660 Capital growth only (Cash withdrawn)
Total Dividends Reinvested $182,410 Compounded dividend snow-ball
Total Out-of-Pocket Invested $145,000 $25k starting + $500/mo × 20 yrs
Advertisement
Responsive In-Content Ad

The DRIP Snowball: How Dividend Reinvestment Multiplies Wealth

A Dividend Reinvestment Plan (DRIP) automatically uses cash dividends paid by a company to purchase additional shares (or fractional shares) on the payment date without commission fees.

1. The Three Drivers of Dividend Compounding

  • Share Accumulation: Reinvested dividends purchase more shares every quarter.
  • Organic Payout Growth: High-quality dividend aristocrats increase their dividend per share annually (e.g. 6% - 10% CAGR).
  • Capital Appreciation: The underlying stock price continues to appreciate in value over time.

2. What is Yield on Cost (YoC)?

Yield on Cost measures the current annual dividend dividend payout divided by your original out-of-pocket capital investment. While an ETF might offer a 3.5% yield to new buyers today, long-term DRIP investors often enjoy a 15% to 30%+ Yield on Cost on their original principal!

Frequently Asked Questions

Yes. In taxable accounts, dividends are subject to income tax (qualified dividends taxed at 0%, 15%, or 20%) in the year they are received, even if automatically reinvested. In an IRA or 401(k), dividends compound 100% tax-free.
A 7% yield with 0% growth will produce steady income but lose purchasing power to inflation. A 3% yield with 10% annual dividend growth will surpass the 7% yield within 9 years and create exponentially more total wealth over 20 years.
S&P 500 companies that have increased their dividend payout every single year for at least 25 consecutive years (such as Procter & Gamble, Johnson & Johnson, and Coca-Cola).