DRIP calculator
Compare reinvesting dividends with taking them as cash, and see how much of long-run return comes from dividends.
Value with dividends reinvested, year 20
Taking dividends as cash instead leaves $68,230 invested plus $20,623 collected. Reinvesting comes out $19,531 ahead.
Assumes the yield stays constant as the price grows, and ignores taxes on dividends.
How this calculator works
With dividend reinvestment, each payout buys more shares, which pay their own dividends. Without it, payouts pile up as cash that does not grow.
The chart compares both, counting the collected cash in the second line so the comparison is fair.
Common questions
Are reinvested dividends taxed?
In a taxable account, yes: they are taxed in the year paid even though you never touched the cash.
How do I turn on DRIP?
Most brokers have a setting to reinvest dividends automatically, for the whole account or per holding. It is usually free.
When does taking cash make sense?
When you live on the income, for example in retirement.
FatDCA calculators are educational estimates, not investment, tax or legal advice. Results depend on the assumptions you enter, and past returns do not predict future returns.
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