Free Dividend Calculator with DRIP
Calculate dividend income, reinvestment scenarios, and visualize your portfolio growth over time with our interactive dividend calculator.
Investment Details
Enter your dividend investment parameters
Results
Your dividend income projection
Total Portfolio Value
$15,382
Total Dividends
$5,382
Final Shares Owned
307.65
Yield on Cost
8.77%
Current yield vs. initial
DRIP Enabled
Your dividends are being reinvested to purchase additional shares, compounding your returns over time.
Share & Save
Share your results or save for later
Important Disclaimer
This calculator provides estimates based on the inputs you provide. Actual dividend payments and investment returns may vary. Stock prices fluctuate, companies may reduce or eliminate dividends, and past performance does not guarantee future results. This tool is for educational purposes only and should not be considered financial advice.
Portfolio Growth Over Time
Visualize the difference between DRIP and cash dividends
How to Use This Calculator
- 1
Enter Your Investment Amount
Input your initial investment and the current stock price to calculate shares owned.
- 2
Set Dividend Parameters
Enter the current dividend yield and expected annual growth rate based on the stock's historical performance.
- 3
Choose DRIP Option
Toggle dividend reinvestment to see how compounding affects your portfolio value over time.
Understanding Dividend Investing
Dividend investing is a strategy focused on building a portfolio of stocks that regularly pay dividends—a portion of company profits distributed to shareholders. Unlike growth stocks that reinvest all earnings, dividend-paying companies return value to investors through quarterly or annual cash payments.
This strategy is particularly attractive for investors seeking passive income streams or those approaching retirement. Companies that consistently pay and grow their dividends, known as "Dividend Aristocrats," often demonstrate financial stability and strong cash flow management.
Key benefits include: predictable income, potential for capital appreciation, and historically lower volatility compared to non-dividend stocks. However, it's important to evaluate dividend sustainability by examining payout ratios and company earnings.
What is DRIP?
DRIP stands for Dividend Reinvestment Plan—a program that automatically uses your dividend payments to purchase additional shares of the stock. Instead of receiving cash, your dividends buy more shares (including fractional shares), which then generate their own dividends in a compounding cycle.
The power of DRIP lies in compound growth. Each reinvested dividend buys more shares, which produce more dividends, which buy even more shares. Over decades, this snowball effect can dramatically increase your portfolio value compared to taking cash dividends.
Most brokers offer DRIP programs with no fees or commissions, making it a cost-effective way to grow your investment automatically. This strategy is especially powerful for long-term investors who don't need immediate income.
Dividend Growth Strategies
A successful dividend growth strategy focuses on companies that not only pay dividends but consistently increase them year over year. These dividend growth stocks offer the best of both worlds: rising income streams and potential capital appreciation as the stock price typically grows alongside dividend increases.
Look for companies with 10+ years of consecutive dividend increases, sustainable payout ratios (30-60% of earnings), and strong business fundamentals. Sectors like consumer staples, healthcare, and utilities historically produce reliable dividend growers.
The Yield on Cost (YOC) metric shown in our calculator demonstrates the power of dividend growth. If you buy a stock yielding 3% and it grows dividends by 7% annually, your YOC after 10 years would be around 5.9%—nearly double your initial yield, based on your original purchase price.
Frequently Asked Questions
A "good" dividend yield typically ranges from 2% to 6%, depending on the sector and market conditions. Yields above 8% may indicate risk—either the stock price has fallen significantly or the dividend may not be sustainable. Focus on companies with steady, growing dividends rather than chasing the highest yields.