DRIP Calculator — See How Dividend Reinvestment Grows Any Stock

How the DRIP Calculator works

DRIP stands for dividend reinvestment plan. Instead of taking dividends as cash, you use them to buy more shares of the same stock. Those new shares earn dividends of their own, which buy still more shares, and so on. This calculator shows how much that compounding could add over time, and lets you compare it with simply taking the dividends as cash. If the idea is new to you, read what DRIP is first.

The inputs

Ticker: the stock to model. The tool fetches its current price and annual dividend per share.
Shares you own: your starting position.
Monthly extra investment: new money you add each month, used to buy more shares.
Annual price growth: how fast you assume the share price rises each year.
Annual dividend growth: how fast you assume the dividend per share rises each year.
Investment period: how many years to project, up to 50.

What happens each year

The model steps forward one year at a time. In each year the share price and the dividend per share rise by the growth rates you entered. Your extra monthly investments for the year, which total twelve times the monthly amount, buy new shares at that year's price. Then the dividends paid on all the shares you hold are used to buy more shares in the "With DRIP" scenario, or are counted as cash in the "Without DRIP" scenario. Portfolio value is shares times price.

Dividends on shares × share price tells you how many new shares reinvesting buys. More shares next year means more dividends next year, which is where the compounding comes from.

Reading the three views

With DRIP: shows shares, price, portfolio value and dividends each year when dividends are reinvested.
Without DRIP: the same starting point but the dividends are paid out as cash, so your share count grows only through your own contributions.
Compare: overlays the two so you can see the gap. The gap is small in the early years and widens as the years pass, because compounding builds on itself.

Why the assumptions matter

Small changes in the growth inputs make a big difference over twenty or thirty years. Try the same stock with price growth of 4%, 7% and 10% to see how sensitive the result is. The model assumes the growth rates stay constant every year, which real markets never do. Prices fall as well as rise, and dividends can be cut. Treat the output as a way to understand how reinvesting works, not as a forecast. A conservative set of assumptions is usually more useful than an optimistic one.

What the tool does not include

Taxes on dividends, which can reduce the amount you have available to reinvest. See how dividends are taxed.
Trading fees, spreads or fractional-share limits at your broker.
Inflation, so a future dollar amount buys less than it does today.
Changes in the stock's yield caused by the price moving faster or slower than the dividend.

To go deeper, see how to judge dividend safety with the payout ratio and how the yield on cost of a long-held position grows over time. You can also use the Dividend Goal Calculator to see how many shares you would need for an income target. This tool is for education and estimation only and is not financial advice.

Little Compass provides general educational information and estimates only. Nothing on this site is financial, investment, tax or legal advice, and results from the calculators are not guarantees. Dividends can be reduced or cancelled, and prices can fall. Consider speaking with a licensed professional before making decisions. See our Terms & Disclaimer.