DRIP Calculator: What Reinvesting Dividends Really Earns

The short answer

A DRIP is a dividend reinvestment plan. Each dividend buys more shares instead of landing as cash. Those new shares pay dividends too, so the pile grows faster.

Over long stretches, reinvesting usually wins. $10,000 in Coca-Cola (KO) in October 2016 grew to about $29,300 with dividends reinvested. Taking the cash instead left about $25,700. Reinvesting added about $3,600.

It doesn't always win. When the price keeps falling, reinvested dividends buy shares that keep losing value. This calculator shows both paths, so you can see which one won for your stock.

What the calculator does

Type a ticker, an amount and a start date. You can also add money each month. You see two answers.

The past. What really happened, with real daily prices and real dividends:

• What reinvesting turned your money into.
• What taking the cash would have left: the shares plus the cash.
• The gap between the two, in dollars.
• A chart of both paths and the money you put in.

The future. Where it could go in 10, 20 or 30 years. It starts from today's dividend and how fast it grew over the last 5 years. It is an illustration, not a forecast.

It works for stocks and funds (ETFs). It is free, and you don't need an account.

How it works

The past uses each day's closing price and each real dividend.

1. You buy on the first trading day on or after your start date.
2. A dividend counts on its ex-dividend date. That is the first day a new buyer no longer gets it.
3. Reinvesting: the dividend buys more shares at that day's closing price. Fractional shares count. A real broker buys a few weeks later, on the day the cash is paid. Over years, the difference is small.
4. Taking the cash: the dividend sits in cash. Your share count stays the same.
5. Monthly top-ups buy shares on the first trading day of each month, in both paths.

If you pick a date before the stock existed, we start on its first trading day. We tell you when we do.

The future uses three simple rules:

1. Today's yield. The last year of dividends, divided by today's price. For a stock that pays four times a year, that is its last four payouts.
2. Dividend growth. How fast that year of dividends grew compared with a year of dividends 5 years earlier. We cap it at 10% a year, up or down.
3. The price grows at the same pace. So the yield stays where it is today.

So we need a year of dividends from 5 years ago to compare with. A young fund gets "not enough history" instead of a made-up number.

Real examples

All start with $10,000 in October 2016 and run to October 2026. No monthly top-ups.

Ticker	Reinvested	Taken as cash	Reinvesting added
KO (Coca-Cola)	$29,319	$25,687	$3,632
JNJ (Johnson & Johnson)	$29,262	$25,917	$3,345
SCHD (dividend fund)	$33,687	$29,554	$4,134
VOO (S&P 500 fund)	$43,028	$39,553	$3,475
O (Realty Income)	$14,518	$13,704	$814

Look at VOO. It pays a small dividend, about 1% a year. Reinvesting still added $3,475, because the shares grew a lot.

Now look at Realty Income (O). It pays a big dividend, about 6% a year. But its price fell over these 10 years, so reinvesting added only $814.

The other side: MSTY. MSTY is a fund that pays huge monthly payouts. Put $10,000 in at launch (February 2024) and reinvest, and it paid about $60,000 in dividends by October 2026. Yet all that reinvesting left $17,789. Taking the cash left $23,888. Its price fell so fast that every reinvested dollar shrank. A big yield is not the same as a good return.

How to read the result

Start with the first line. It tells you what reinvesting turned your money into.

Then read the gap. "Reinvesting added $3,600" means the extra shares were worth it. "Taking the cash did better" means the price fell. The cash was safer than more shares.

In the chart, the green line is reinvesting. The grey line is taking the cash. The dashed line is the money you put in. When the green line pulls away from the grey one, reinvesting is doing its job.

On the future tab, read the line under the result. It tells you the yield and growth we assumed. If they look too rosy, the result is too rosy.

What the calculator can't tell you

• Taxes. In a normal US brokerage account, dividends are taxed in the year you get them. That is true even when you reinvest them. We leave taxes out. In an IRA or 401(k), they are not taxed each year.
• Fees. Most big brokers reinvest dividends for free. We assume no fees.
• The future. The future tab is a "what if", not a promise. Dividends can be cut. Prices can fall.
• Whether the dividend is safe. A dividend is only worth reinvesting if the company can keep paying it. For that, see the free dividend calculator.

Questions

What does DRIP stand for? Dividend reinvestment plan. Each dividend buys more shares of the same stock or fund instead of being paid to you as cash.

Should I reinvest my dividends? If you don't need the income now and you still like the company, reinvesting usually grows your money faster. If you need the cash to live on, or the price keeps falling, taking the cash can be better. Run your stock in the calculator and look at the gap.

Are reinvested dividends taxed? Yes, in a normal US brokerage account. You owe tax in the year the dividend is paid, even if it buys more shares. In an IRA or 401(k), they are not taxed each year.

How do I turn on dividend reinvestment? At most big US brokers, it is a free setting in your account. Look for "dividend reinvestment" or "DRIP" in the account or position settings. You can usually switch it on for all your holdings or one at a time.

Does it work for ETFs like SCHD or VOO? Yes. Type any US stock or fund ticker. For a fund, our button takes you to our list of companies we've checked, because we don't rate funds.

Why does reinvesting sometimes lose? Reinvesting buys more shares. If the price keeps falling, those extra shares lose value too. Taking the cash locks in the payout. That is what happened with MSTY above.

Where does the data come from? Real daily closing prices and real dividend dates for each stock and fund, adjusted for stock splits. We don't use a made-up average yield.

Is it really free? Yes. No account and no signup.

The next step

Reinvesting only pays off if the dividend keeps coming. To check how steady a company's dividend looks, try the free dividend calculator. To see how much you need invested to live off dividends, try the dividend income planner. To see what any amount in a stock became, dividends or not, try the stock return calculator.