Dividend Calculator with DRIP
See how a dividend portfolio grows when you reinvest the payouts. Enter your starting amount, yield and growth assumptions to project portfolio value and annual dividend income year by year.
Portfolio value
| Year | Dividends (after tax) | Portfolio value | Yield on cost |
|---|
How to use the dividend calculator
- Enter your starting amount, monthly contributions and the portfolio's current dividend yield.
- Set expected dividend growth and share price growth. Mature dividend growers often raise payouts 5–7% a year.
- Choose whether to reinvest dividends and enter the tax rate on dividends (qualified dividends are often taxed at 15%).
How dividend reinvestment compounds
A dividend reinvestment plan (DRIP) uses each payout to buy more shares, which then pay their own dividends. Combined with companies that raise their dividends over time, income can grow much faster than the yield alone suggests.
Yield on cost is the current annual dividend divided by the total amount you have invested. A portfolio bought at a 3.5% yield can produce a far higher yield on cost after decades of dividend growth and reinvestment.
Dividends are not guaranteed; companies can cut them, and share prices fluctuate. In taxable accounts, qualified dividends are generally taxed at 0%, 15% or 20%; in an IRA or 401(k) taxes are deferred, so you can set the tax rate to 0. The model compounds monthly and assumes steady growth for planning purposes.
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Frequently asked questions
What is a good dividend yield?
Broad U.S. stock indexes yield about 1–2%; dividend-focused funds often 3–4%. Very high yields can signal risk of a cut.
Should I reinvest dividends?
Reinvesting usually maximizes long-term growth; taking cash suits people who need the income now.
Are dividends taxed if reinvested?
Yes. In a taxable account, reinvested dividends are taxed in the year paid.
What is yield on cost?
Annual dividends divided by your original investment, which rises as dividends grow.