DRIP Calculator — Dividend Reinvestment Growth
See how reinvesting dividends accelerates compound growth. Compare with and without reinvestment over time.
The Power of Dividend Reinvestment
DRIP (Dividend Reinvestment Plan) automatically uses your dividend payments to buy more shares. This creates a compound-on-compound effect: you earn dividends on your original shares, which buy more shares, which earn more dividends. Over 20+ years, DRIP typically adds 30-50% to total returns compared to taking dividends as cash. A $10,000 investment in the S&P 500 in 2000 would be worth approximately $32,000 from price growth alone — but $55,000+ with dividends reinvested.
Dividend Yield vs Growth
High-yield stocks (4-8%): REITs, utilities, telecoms. More current income but slower price growth. Dividend growth stocks (1-3% yield): Blue chips that raise dividends annually (Dividend Aristocrats). Lower yield but growing payouts + price appreciation. For long-term DRIP investors, dividend growth stocks often outperform high-yield stocks because the rising dividend compounds more aggressively over time.
Warren Buffett has never sold a share of Coca-Cola since buying in 1988. His original $1.3 billion investment now pays $704 million per year in dividends alone — a 54% annual yield on his original cost basis. This is the power of buying quality dividend stocks and holding forever with DRIP.
