Use our Dividend Reinvestment Calculator (DRIP Returns Calculator) to see the value of future investments with and without reinvesting dividends.
Dividend Reinvestment Calculator Results Explained
The total value is equal to the stock price multiplied by the total number of shares, including any shares purchased through dividend reinvestment.
The number of shares includes initial shares plus shares purchased through dividend reinvestment. The dividends paid is the total sum of distributions paid on both the initial shares and any shares from dividend reinvestment.
The annualized return is the average rate of return you receive from your dividends per year.
Reinvesting Your Dividends
Reinvesting your dividends is an easy – and incredibly effective – way to turn those cash payments into a sizable sum. How does it work? Instead of spending your distributions, you use them to purchase additional shares of a stock. Those new shares produce new dividends, allowing you to take advantage of compound growth. And if you set up a Dividend Reinvestment Plan (DRIP), the entire process will occur automatically so you can sit back and watch your retirement savings increase exponentially.
We recommend setting up a DRIP with your broker. Just let your broker know you want your dividends reinvested (either all of them or specific stocks). After that, your dividends will be automatically reinvested. Most brokers provide this service for free.
You can also set up a DRIP with many of the companies you’ve invested in. However, they often charge fees for setting up the account, reinvesting the dividend and selling shares. Additionally, if you set up DRIPs with each company you’ve invested in, you’d have to keep track of many separate accounts.
If you set up your DRIP with your broker, you’ll have all of the information in one place, and it won’t cost you anything.
To get an idea of the power of dividend reinvestment (and how it can grow your nest egg), use the dividend reinvestment calculator above. Input basic information about a dividend-paying stock, then click “Calculate” to see what your investment will be worth in a set number of years with and without dividend reinvestment.