Dividend & DRIP Calculator

What this computes

A dividend portfolio has two engines: the share price, which may appreciate, and the dividend, a cash payout per share that often grows on its own schedule. This calculator runs both year by year. You give it a starting investment, the share price, the starting yield, how fast the dividend and the price grow, any yearly contribution, a tax rate, and whether you reinvest. It returns the final portfolio value, the total dividends paid, your income in the final year, and your yield on cost.

How the projection works

Each year, in order:

1. Any contribution buys shares at that year's starting price.
2. The dividend is paid on the shares you hold, at a per-share amount that grows each year by the dividend growth rate.
3. Dividend tax, if any, is withheld.
4. With DRIP on, the after-tax dividend buys more shares at the year-end price; with DRIP off, it accrues as cash.
5. The share price grows by the price growth rate.

One deliberate choice: the dividend is modeled as a per-share amount, not a fixed yield. A fixed yield would make the payout silently track the price and bake price growth into the income. Real dividend investing is about a payout that rises independently, so the starting yield only sets the first year's per-share dividend (price × yield); it grows from there by the dividend growth rate.

A reinvested dividend buys shares that pay their own dividends — the loop that turns a 3% yield into double-digit yield on cost.

What DRIP actually does

Reinvesting is a second compounding loop layered on top of price growth. Take $10,000 in a stock yielding 3%, with the dividend growing 6% a year, the price growing 5%, and $2,400 of new money added annually. Over 20 years, the reinvested version ends well ahead of the take-the-cash version — not because the dividends are bigger, but because each one bought shares that then paid their own dividends. Turn the toggle off and you'll watch those same dividends pile up as idle cash instead. The gap between the two is the value of the DRIP, and it widens every year. For the underlying mechanics, see compound interest and run a pure-growth projection on the compound interest calculator.

Yield on cost — the number to watch

Current yield (dividend ÷ today's price) tells you what a new buyer gets. Yield on cost (current income ÷ what you invested) tells you what your past self bought. Because the per-share dividend grows and DRIP keeps adding shares, yield on cost climbs over time — a position bought at a 3% yield can pay 8–10% on cost two decades later. It's the clearest single measure of a dividend-growth strategy working, and it's the headline stat in the calculator above.

What this calculator doesn't model

• Dividend cuts and volatility. The model assumes a steady growth rate. Real companies freeze, cut, or suspend dividends, and prices don't rise in a straight line. Treat the output as a smooth baseline, not a forecast.
• Inflation. Results are in nominal dollars. To see them in today's purchasing power, run the final value through the inflation calculator.
• Reinvestment timing and fees. Reinvestment is modeled once a year at the year-end price; real DRIPs reinvest each payout. Brokerage fees and bid-ask spreads are ignored (most major brokers now offer free fractional reinvestment).
• Tax detail. A single dividend tax rate is applied; real rates depend on qualified vs ordinary status, income, and account type. See tax brackets for how marginal rates work.