Dividend Calculator
Project your dividend income, your portfolio value with reinvestment (DRIP), and your rising yield on cost — with dividend growth and optional contributions. Instant, no sign-up, and the method is shown so you can trust every figure.
Price growth & contributions
Quick answer
$25,000 invested at a 3.5% yield, with the dividend growing 6% a year and reinvested, becomes $125,173 after 20 years and pays $5,760 a year. Take the cash instead and it is $54,778 paying $2,647 — reinvesting more than doubles both. Change the inputs above and this answer updates with your own numbers.
Portfolio value: reinvesting vs taking the cash
Green = dividends reinvested (DRIP), grey = dividends taken as cash. The gap is the power of compounding.
DRIP vs cash — the long-run difference
Same stock, same years. Reinvesting turns dividends into more dividend-paying shares.
| Strategy | Portfolio value | Total dividends | Final income |
|---|
Reinvesting doubles the income, not just the value
The usual argument for reinvesting dividends is that you end up with a bigger portfolio. True, but incomplete — and the incomplete version is why people who want income sometimes take the cash too early.
Same $25,000, same 3.5% starting yield, same 6% dividend growth and 4% price growth, over 20 years:
| Portfolio value | Dividends received | Annual income at year 20 | |
|---|---|---|---|
| Reinvest (DRIP) | $125,173 | $51,551 | $5,760 |
| Take the cash | $54,778 | $32,187 | $2,647 |
Reinvesting produces 2.3 times the portfolio — and also 2.2 times the annual income. The reinvested version wins on the very measure the income investor cares about, because every reinvested dividend buys shares that pay dividends of their own.
That is the case for reinvesting during the accumulation years and switching to cash only when you actually need to spend it. Taking the income early does not just cost you growth; it costs you future income.
What time does to a dividend position
Same $25,000, reinvested, at 3.5% yield and 6% dividend growth:
| Years held | Portfolio value | Dividends received | Yield on cost |
|---|---|---|---|
| 10 | $53,831 | $13,894 | 6.27% |
| 20 | $125,173 | $51,551 | 11.22% |
| 30 | $319,187 | $162,710 | 20.10% |
| 40 | $908,966 | $526,306 | 36.00% |
The yield on cost column is the one that surprises people: after 40 years the position pays 36% a year against what was originally paid for it, from a starting yield of 3.5%. Nothing was added — the dividend simply grew while the purchase price stayed fixed.
The growth rate decides almost everything
Same $25,000, same 3.5% starting yield, same 20 years, varying only how fast the dividend grows:
| Dividend growth | Portfolio value | Dividends received | Yield on cost |
|---|---|---|---|
| 0% | $89,270 | $22,997 | 3.50% |
| 3% | $102,806 | $33,556 | 6.32% |
| 6% | $125,173 | $51,551 | 11.22% |
| 9% | $164,728 | $84,334 | 19.62% |
A dividend that never rises leaves the yield on cost exactly where it started, at 3.5%, and total dividends at less than half the 6% case. This is why dividend growth investors care more about the rate of increase than the starting yield.
Yield alone tells you almost nothing
A high yield can mean a cheap, sound company — or a share price that has fallen because the market expects the dividend to be cut. The yield rises either way, because it is simply the dividend divided by the price. A falling price produces exactly the same arithmetic as a rising dividend.
The questions that actually matter sit behind the yield: is the dividend covered by earnings and by cash flow, has it been raised consistently, and is the business stable enough to keep raising it? A cut resets everything on this page — the compounding, the yield on cost, the income — and no calculator can foresee one.
How the projection works
The model steps forward one year at a time:
- Grow the dividend per share by your dividend growth rate.
- Grow the share price by your price growth rate.
- Pay the dividend on every share held.
- If reinvesting, buy more shares with that cash at the new price; if not, bank it.
- Add any new contribution, and repeat.
Note step 4: reinvesting at a higher price buys fewer shares, so strong price growth is not unambiguously good for a reinvesting income investor. The model captures that rather than assuming shares are always bought at the original price.
See the method with your own numbers
These update live from the calculator inputs above.
What this calculator cannot know
- Dividend cuts. The model assumes the dividend grows every year. Real companies suspend and cut, usually at the worst moment.
- Tax. Dividends are typically taxable in a normal brokerage account, which reduces what is available to reinvest. Figures here are gross.
- Sequence. Growth is applied smoothly; real markets are not smooth, and the order of returns changes the outcome.
- Concentration. A single high-yield holding carries the risk of that single company. The arithmetic does not know how many companies you own.
Example: $25,000 held for 20 years
- Reinvesting: $125,173 in value, $51,551 of dividends received, $5,760 a year of income by year 20, a yield on cost of 11.22%.
- Taking the cash: $54,778 in value and $2,647 a year of income.
- The difference in annual income alone is $3,113 a year, from the identical starting investment.
Frequently asked questions
Should I reinvest dividends or take the cash?
While you are still building, reinvesting usually wins on both measures. On $25,000 at a 3.5% yield with 6% dividend growth over 20 years, reinvesting gives $125,173 and $5,760 a year of income; taking the cash gives $54,778 and $2,647. Reinvesting produces more income, not merely more capital, because reinvested dividends buy shares that pay dividends themselves.
What is a good dividend yield?
Yield on its own is close to meaningless, because it rises when the price falls just as readily as when the dividend rises. A very high yield often signals that the market expects a cut. What matters more is whether the dividend is covered by earnings and cash flow, and whether it has been raised consistently — a modest yield growing 6% a year beats a high yield growing 0%, as the growth table above shows.
What is DRIP?
A dividend reinvestment plan automatically uses each dividend to buy more shares instead of paying cash. Many brokers offer it free and support fractional shares. The effect is compounding within the position: more shares produce more dividends, which buy more shares.
How is yield on cost different from dividend yield?
Yield on cost divides the current dividend by what you originally paid; dividend yield divides it by today's price. Yield on cost describes your own position and rises as the dividend grows — in the example above it reaches 11.22% after 20 years from a 3.5% start. It says nothing about whether the shares are worth buying today. There is a dedicated tool for it.
Does the calculator account for tax?
No, the figures are gross. In a normal brokerage account dividends are usually taxable in the year received, which reduces the amount available to reinvest and therefore the compounding. In a tax-advantaged account they typically are not, which is one reason dividend strategies are often held there.
What happens if the dividend is cut?
Everything on this page resets. The income falls immediately, the reinvestment engine slows, and the yield on cost drops with it. The model assumes uninterrupted growth, which is the single largest way it can be optimistic — the reason dividend investors watch payout ratios and coverage rather than yield alone.
Method & sources
- Calculation: Year-by-year share-based simulation — dividends collected, optionally reinvested at the current price, with dividend and price growth applied annually. Cross-checked against an independent recomputation.
- Concepts (DRIP, yield on cost, dividend growth) follow standard dividend-investing definitions; figures are illustrative, not forecasts.
- Reviewed: · Assumptions reviewed quarterly.
Educational estimate, not investment advice. Dividends can be cut and returns can be negative.
Run your own numbers
Enter your investment, yield, dividend growth and horizon, and compare reinvesting against taking the cash — on income as well as value.
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