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Dividend Reinvestment Calculator

Model the compounding effect of automatically reinvesting every dividend received.

About Dividend Reinvestment Calculator

Reinvesting makes each dividend buy shares that pay further dividends, so the yield compounds alongside the price. Taking dividends as cash leaves them idle, which over twenty years is a substantial difference even at modest yields. Reinvestment is the largest single component of long-run equity returns, and it is entirely passive once switched on.

Formula

Dividend Reinvestment

Reinvested value = investment × (1 + price growth + yield)^years

reinvestment advantage
Extra value from dividends themselves earning returns

Worked example

With the default values below, Dividend Reinvestment Calculator returns Value With Dividends Reinvested of $116,523.93. Change any input above and every figure here is recalculated in your browser.

Inputs used

Initial investmentminimum 0
25,000
Dividend yieldaccepts 0–100 %
4 %
Annual share price growthaccepts 0–100 %
4 %
Annual dividend growthaccepts 0–100 %
5 %
Years heldaccepts 1–50 years
20 years

Results

Value With Dividends Reinvested
$116,523.93
Value With Dividends Taken as Cash
$87,844.03
Advantage From Reinvesting
$28,679.90
Effective Total Return Rate
8.000%
Advantage as Share of the Non-Reinvested Outcome
32.65%

Step by step

  1. 1Values used
  2. 2Dividend Reinvestment
  3. 3Value With Dividends Reinvested= 116,523.93
  4. 4Value With Dividends Taken as Cash= 87,844.03
  5. 5Advantage From Reinvesting= 28,679.90
  6. 6Effective Total Return Rate= 8.000
  7. 7Advantage as Share of the Non-Reinvested Outcome= 32.65

Assumptions and limits

  • The result is derived only from the 5 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax or fees or charges into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Frequently Asked Questions

How is Dividend Reinvestment calculated?

Reinvested value = investment × (1 + price growth + yield)^years Reinvesting makes each dividend buy shares that pay further dividends, so the yield compounds alongside the price. Taking dividends as cash leaves them idle, which over twenty years is a substantial difference even at modest yields.

Why does Dividend Reinvestment matter?

Reinvestment is the largest single component of long-run equity returns, and it is entirely passive once switched on.

What values do I need to enter?

This calculator takes 5 inputs: Initial investment, Dividend yield, Annual share price growth, Annual dividend growth, Years held. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.

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