How to use it
- Type the Number of shares you hold and the Share price now.
- Type the Dividend yield per year and the Share price growth per year you want to test.
- Choose the Dividend payments a year and the number of Years to keep the shares.
- Read Value of the holding at the end and Extra from reinvesting, then open Year by year and the chart.
How reinvesting works
In a dividend reinvestment plan (DRIP), the cash dividend buys more shares of the same company instead of being paid out. More shares earn a larger dividend at the next payment, so the holding can grow faster than the share price alone.
A dividend reinvestment plan filed by one company on SEC EDGAR says that holders may reinvest all or part of their cash dividends, that the shares bought are credited to them, and that fractional share interests can be credited to the plan account.
Dividend in a payment = shares held × dividend yield × share price at the start of the year ÷ payments a year
New shares = dividend ÷ share price
Value = shares held × share price at the end of the year- Dividend yield: the dividend a year as a percent of the share price.
- Growth: the share price changes once a year by this percent.
How this calculator applies the rates
The model keeps the growth and the yield the same every year. The share price rises by the growth rate once a year. The yield applies to the price at the start of each year, and the year's dividend is split into the payments you choose. Each payment buys shares at that year's price.
Paying more often within a year means that shares bought earlier earn dividends for longer, so the result rises a little with more payments.
What this calculator does not include
- Dividends that are cut, suspended or paid in shares instead of cash.
- Tax on dividends. The IRS says dividends must still be reported as taxable income, even when no Form 1099-DIV is received. This calculator does not work out tax.
- Plan fees, commissions and any discount on shares bought through a plan. The plan document above says a discount of 0 to 5% from the market price may apply in one plan.
Worked example: 100 shares at 50, 4% yield, 5% growth, 10 years
The holding starts at 100 shares worth 5,000.00. The dividends are paid four times a year. After 10 years the reinvested dividends total 3,123.52, the shares have grown to 148.8864, and the holding is worth 12,126.01.
If the same dividends had been paid out in cash, the holding would be worth 10,660.05. Reinvesting adds 1,465.96. The table shows years 1, 5 and 10 of the full year-by-year table.
| Year | Price at year end | Dividends | Shares | Value |
|---|---|---|---|---|
| 1 | 52.50 | 203.02 | 104.0604 | 5,463.17 |
| 5 | 63.81 | 289.36 | 122.0190 | 7,786.53 |
| 10 | 81.44 | 450.62 | 148.8864 | 12,126.01 |
Frequently asked questions
What is a DRIP?
A dividend reinvestment plan uses each cash dividend to buy more shares of the same company. One company's plan on SEC EDGAR says holders may reinvest all or part of their cash dividends, with the shares bought credited to them.
Does reinvesting avoid tax?
No. The IRS says you must still report all taxable dividend income, even if you do not receive a Form 1099-DIV. This calculator does not work out tax, so use your own figures for it.
Why does the reinvested value beat the cash value?
Each reinvested dividend buys shares that earn their own dividends, and share in the price growth, in later years. The extra value in the result is that effect, and it grows with the yield, the growth and the number of years.
Does paying more often help?
Within a year, reinvesting more often buys shares sooner, so they earn dividends for more of the year. Try the same figures with yearly and monthly payments to see the difference.
Can the growth rate be negative?
Yes. Enter a negative growth rate to test a fall in the share price. The yield then applies to a lower price, and each reinvestment buys more shares for the same dividend.
Is the result a forecast?
No. It uses one growth rate and one yield for every year, which is a simple assumption. Real prices and dividends change, and a company can cut or stop its dividend.
Sources
- SEC EDGAR: a company's dividend reinvestment plan (2019 filing, questions and answers on how the plan works)
- IRS: Tax topic 404, Dividends (taxable dividend income must be reported; reviewed 8 October 2026)
Figures and text last checked on Thursday, November 12, 2026.