Dividend Reinvestment Calculator
What reinvesting dividends grows an investment to against taking them as cash, with share price and dividend growth kept separate, and tax on dividends.
Result
Value with dividends reinvested: $27,048.14Estimate
On steady growth rates you chose. Real prices and dividends vary, and dividends can be cut.
- Value taking the dividends as cash
- $20,000.00Estimate
- Difference
- $7,048.14Estimate
- Shares held at the end
- 540.9628Estimate
- Dividends received and reinvested
- $17,048.14Estimate
- Annual dividend income at the end
- $1,081.93Estimate
https://calcgallery.com/investment-returns/dividend-reinvestment-calculator/
Results are arithmetic on the returns, rates and horizons you enter, not a forecast and not investment, tax or retirement advice. The site supplies no expected return, inflation rate, contribution limit, tax rate or withdrawal rate. Real returns vary from year to year, and fees, taxes and the order of returns all change the outcome. Check anything that matters with a qualified adviser. Read the full disclaimer
How to use the Dividend Reinvestment Calculator
- Enter what you invest, the share price and the annual dividend per share.
- Enter how fast you expect the share price and the dividend each to grow, the number of years and how often dividends are paid.
- Optionally enter a tax rate on dividends, and compare reinvesting them with taking them as cash.
How it is modelled
The page steps through each dividend payment. The share price and the dividend per share each grow by their own rate, spread evenly across the payments in a year. On each payment date the dividend, less any tax, is paid on every share held; with reinvestment it immediately buys more shares at that day’s price. Taking the cash, you keep your original shares and collect the dividends, which are added to the value without earning anything.
Two checks on the arithmetic
With no dividend, reinvesting and not reinvesting are identical, because there is nothing to reinvest. With the dividend taxed away entirely, they are identical again. The page is tested for both, because any difference in either case would mean the model was counting something twice.
What is not modelled
Fees, discounts some plans give on reinvested shares, and the fact that dividends and prices do not grow at steady rates. Dividends can be cut.
With your numbers
- $10,000.00 buys 200 shares
- Reinvesting every dividend: 540.9628 shares worth $91,594.60
- Taking the cash: the original shares worth $33,863.55 plus $19,683.79 of dividends = $53,547.34
Quick reference
On steady growth rates you chose. Real prices and dividends vary, and dividends can be cut.
| Example | Value with dividends reinvested |
|---|---|
| 10,000 at 50, 2.00 dividend, 10 years flat | $14,888.64 |
| 25 years, 5% price and dividend growth | $91,594.60 |
| No dividend, 5% price growth | $33,863.55 |
| Dividend fully taxed | $10,000.00 |
| 15% tax on dividends | $78,944.66 |
| Monthly payer, 20 years | $139,335.30 |
Common questions about the Dividend Reinvestment Calculator
- How much difference does reinvesting make?
- Over long periods, a lot. 10,000 in a 50 share paying 2.00 a year, with price and dividend both growing 5% a year, is worth about 91,600 after 25 years with every dividend reinvested, against about 53,500 taking the dividends as cash, cash included. Each reinvested dividend buys shares that pay dividends of their own.
- Why are price growth and dividend growth separate?
- Because they are different things and need not move together. A company can raise its dividend while its share price falls, or the reverse. Assuming one rate for both, as many calculators do, can overstate the result.
- Why are fractional shares kept?
- Reinvestment plans buy fractions of a share with each dividend, so rounding down to whole shares each time would be wrong, and the error would compound over the years.
- How does tax change it?
- In a taxable account, tax on each dividend is due whether you reinvest it or not, so less goes back in. Enter your tax rate on dividends; if it were 100%, there would be nothing to reinvest and the two results would be the same.