Dividend Yield & DRIP Compounder
Simulate year-by-year how reinvesting dividends (DRIP) compounds a portfolio compared to taking dividends as cash, from your starting investment, yield.
Portfolio value with DRIP
$26,089.67
Without DRIP (dividends as cash)
$22,939.63
Extra from reinvesting
$3,150.04
Total dividends received (DRIP)
$6,102.86
This runs a real year-by-year simulation (not a shortcut formula): each year's dividend is paid on the current share count, reinvested shares compound into larger future dividends, and both price and dividend-per-share grow at the rates you set. It assumes a constant growth rate every year, which real markets never actually deliver — treat this as an illustration of how reinvestment compounds, not a forecast of any real investment's future value.
About this tool
How to use it
- Enter your starting investment amount.
- Enter the current dividend yield, an assumed annual dividend growth rate, and an assumed annual share price growth rate.
- Enter how many years to simulate.
- Press Simulate Growth, or just keep typing — the comparison updates live.
- Compare the DRIP hero figure against the without-DRIP metric to see how much reinvesting is worth over that period.
Why it matters
Reinvesting dividends doesn't just add the dividend amount to your portfolio — it buys more shares, which then earn their own dividends the following year, compounding on top of both price growth and dividend growth at once. Running the two scenarios (reinvest vs. take as cash) side by side, year by year, makes that extra compounding effect visible as a concrete dollar figure instead of an abstract idea.
When to use it
Useful when deciding whether to enroll in a dividend reinvestment plan (DRIP), when comparing the long-run effect of reinvesting versus living off dividend income, or just to see how sensitive the outcome is to different yield and growth assumptions.
Good to know
This runs a real year-by-year simulation — each year's dividend is paid on that year's share count, and (with DRIP) reinvested shares compound into larger dividends in every subsequent year — not a shortcut formula. It assumes the dividend yield, dividend growth rate, and price growth rate all stay exactly constant every single year, which no real investment does; real returns include dividend cuts, price volatility, and years of no growth at all. Treat the result as an illustration of how the reinvestment mechanism compounds, not a forecast of any real investment's actual future value.
Common questions
What does DRIP mean?
Dividend Reinvestment Plan — instead of receiving dividend payments as cash, they're automatically used to buy more shares of the same investment, which then earn their own dividends going forward.
Why does the DRIP total end up higher than just adding up all the dividends?
Because reinvested dividends buy shares that then benefit from both future price growth and future dividend growth themselves — the compounding applies to the reinvested amount just as much as it applies to the original investment, which is why the gap between the two scenarios grows faster over longer time periods.
Is this a realistic prediction of what my investment will actually be worth?
No — it assumes constant yield, dividend growth, and price growth every single year, which real markets never deliver. Use it to understand the mechanics of how reinvestment compounds relative to taking cash, not as a forecast of an actual future account balance.
What's a realistic dividend growth rate to assume?
This varies enormously by company and market conditions, and this tool doesn't assert any particular rate is realistic — it's an assumption you set based on your own research into a specific investment's dividend history, not a figure the tool looks up or verifies.