Calculator · Dividends

Dividend reinvestment calculator

Enter what you invest, the share price, the dividend yield, how fast the dividend and the price grow, a tax rate and the number of years. The calculator compares reinvesting every quarterly payment with taking the cash, year by year.

Your numbers

Zero inside an IRA or 401(k).

Value, reinvested

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Value + cash taken

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Final-year income, reinvested

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Final-year income, cash

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The working

    How the comparison works

    Both paths start with the same shares. Each quarter the holding pays a quarter of the annual dividend per share, minus the tax rate you set. On the reinvested path that money buys more shares at the quarter's price, and those shares pay dividends of their own from then on. On the cash path the share count never changes, and the payments are added up as cash taken out.

    The dividend per share rises by the growth rate once a year and the price rises by its own rate spread across the quarters. Those are assumptions, so the useful reading is the gap between the two columns under the same assumptions, and how that gap widens with time. The dividend reinvestment plan entry covers how brokers and transfer agents run the reinvestment itself.

    When cash is the better choice

    Reinvesting is the default for money you are building, which is the position taken in reinvest dividends automatically unless you have a reason not to. The reasons not to are real: you need the income, the position has grown too large, or you would rather put the cash into a different holding. For the income side, the dividend income calculator works out what a portfolio pays.

    Questions about this calculator

    Does it account for taxes on dividends?

    Enter a tax rate and each payment is reduced by it before it is reinvested or taken as cash. In a taxable account reinvested dividends are taxed in the year they are paid, so the reduction applies to both paths. Inside an IRA, leave the rate at zero.

    Why is the price growth an input?

    Reinvested dividends buy shares at the price of the day, so the number of shares each payment buys depends on where the price is. A faster-rising price means fewer shares per dollar reinvested and a larger value for the shares already held.

    Are the results a forecast?

    No. The growth rates are assumptions you choose, and real dividends and prices do not grow in straight lines. Use the output to compare the two paths under the same assumptions.

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