Dividend Reinvestment (DRIP) Calculator

Calculate the growth of an investment with dividend reinvestment and dividend growth.

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What This Calculator Does

Estimate compounding impact from reinvesting dividends and increasing share count over multi-year investment horizons.

It combines Initial Investment, Current Share Price, Annual Dividend Yield, Annual Dividend Growth Rate to estimate Final Portfolio Value, Total Return, Annualized Return.

Formula & Method

Core equations: Each year dividends buy new shares:

\text{New Shares} = \frac{\text{Shares} \times P \times Y_d}{P}

where

P

is the current share price and

Y_d

is the dividend yield. Share price grows annually:

P_{t+1} = P_t(1 + g_p)

. Annualized return:

r = \left(\frac{V_{final}}{V_{initial}}\right)^{1/t} - 1

Inputs are applied in base units, then derived metrics are computed from the same equations and rounded for display.

Notation used in the formulas: $R$ = Final Portfolio Value; $x_{1}$ = Initial Investment; $x_{2}$ = Current Share Price; $x_{3}$ = Annual Dividend Yield; $x_{4}$ = Annual Dividend Growth Rate; $x_{5}$ = Annual Share Price Growth; $x_{6}$ = Holding Period.

Method summary: inputs are normalized to consistent units, core equations are evaluated, then secondary values are derived and rounded for display.

Use this to compare income-focused strategies and evaluate long-run reinvestment effects on total return.

Reference Book

Mathematics of Investment and Credit

Samuel A. Broverman · ACTEX Learning

A widely used text for time-value-of-money, annuity, loan, amortization, and bond calculations.

View Book

Inputs Used

Initial Investment: Starting investment amount
Current Share Price: Current price per share
Annual Dividend Yield: Current annual dividend yield
Annual Dividend Growth Rate: Expected annual dividend growth rate
Annual Share Price Growth: Expected annual share price appreciation
Holding Period: Investment time horizon

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