🔄 Dividend Reinvestment (DRIP) Calculator
Model the power of compounding dividends over 1 to 30 years and compare portfolio values with vs. without automated reinvestment.
Compounded Future Value
Year-by-Year Growth Table
| Year | Portfolio (With DRIP) | Portfolio (No DRIP) | Annual Dividends | Total Shares |
|---|
The Power of Dollar-Cost Averaging via DRIP
Reinvesting dividends automatically enforces disciplined dollar-cost averaging. When market valuations drop, your quarterly dividend checks automatically scoop up more shares at discounted valuations, setting up explosive portfolio appreciation when the market recovers.
Frequently asked questions
What is a Dividend Reinvestment Plan (DRIP)?
A DRIP automatically uses cash dividend distributions to purchase additional whole or fractional shares of the same underlying company or fund, fueling compound growth without incurring trading commissions.
Are reinvested dividends still taxable?
Yes. In taxable brokerage accounts, reinvested dividends are treated as taxable income in the tax year received, even though cash was automatically used to acquire more shares.
How does DRIP accelerate long-term wealth?
DRIP initiates an exponential snowball effect: new shares bought by dividends generate their own dividends in subsequent quarters, continuously expanding your share count even during market downturns.
Can I buy fractional shares with DRIP?
Most modern brokerage platforms support fractional share dividend reinvestment down to four decimal places, ensuring every cent of cash dividend is put to work immediately.