See how much more you accumulate by reinvesting dividends compared to taking them as cash.
DRIP Advantage
$0
more than taking cash dividends
DRIP (Reinvested)
Final portfolio value--
Total dividends reinvested--
Annual div income at end--
Cash Dividends
Final portfolio value--
Total cash dividends received--
Annual div income at end--
Year-by-Year (every 5 years)
Year
DRIP Value
Cash Value
DRIP Div / yr
Advantage
This tool provides estimates for educational purposes only. Not financial or tax advice. Neither MayoCalc nor Cook Media Systems assumes any liability. See our Disclaimer and Terms.
The Power of Dividend Reinvestment
When you reinvest dividends, each payment buys more shares, which generate more dividends, which buy even more shares. This compounding on top of stock appreciation creates three sources of return: price appreciation, yield on cost, and dividend growth. Over 20-30 years, the difference between DRIP and cash dividends can represent hundreds of thousands of dollars.
Are DRIP dividends taxable?
Yes - qualified dividends reinvested through a DRIP are still taxable in the year paid, even without cash received. DRIPs work best in tax-advantaged accounts (IRA, 401k) where dividends compound without annual taxation.
What dividend yield should I enter?
The S&P 500 average yield is 1.5-2%. High-yield sectors (utilities, REITs) commonly yield 3-6%. Enter the current yield of the specific investment you are analyzing.
When should I stop reinvesting dividends?
In retirement or when you need income, switch from DRIP to cash dividends. The calculator shows your annual dividend income at the end of your projection period - a useful retirement income planning metric.