DRIP Calculator (Dividend Reinvestment)
Reinvesting dividends is how income stocks turn into growth machines. This calculator models a dividend reinvestment plan — contributions, compounding, and the dividend income stream it produces.
How this calculator works
Each month the calculator adds your contribution, credits the month's dividend (balance × yield ÷ 12), and compounds the whole portfolio at your total return (yield + price growth). Because dividends buy more shares, the income stream itself grows — the final row shows the annual dividend income your ending balance generates.
Frequently asked questions
How is DRIP different from a regular brokerage account?
A DRIP automatically uses dividend cash to buy more shares of the same stock, often with no commission and even fractional shares. You can achieve the same effect in any brokerage by turning on dividend reinvestment — the compounding is identical.
Are reinvested dividends still taxed?
Yes — reinvesting does not defer taxes. Qualified dividends are taxed at capital-gains rates (0/15/20% in 2026) the year they are paid, even if you automatically buy more shares. A tax-advantaged account like an IRA or 401(k) avoids this until withdrawal.
What is a realistic dividend yield?
The S&P 500 yields roughly 1.2–1.5% in 2026; dividend-focused funds and value stocks commonly yield 3–5%. Yields above 6–7% often signal a payout at risk — the market is pricing in a possible cut, so a high yield alone is not free money.
Disclaimer: Results are estimates for general information only and do not constitute financial, tax, or legal advice. Figures reflect 2026 rules and may change. Always confirm current limits and consult a qualified professional before making decisions. Official figures: IRS.gov · 2026 limits per IRS tax inflation adjustments.