Dividend Reinvestment Calculator
Compounding the share count, not just the price.
Work out Dividend Reinvestment. Compounding the share count, not just the price. Shows the working, not just the answer.
Value after 20 years
47,922
10,973 more than taking the dividends as cash
Reinvesting compounds the share count as well as the price. Over decades that second compounding accounts for a large share of total equity returns — on many long-run measures, more than half of the entire return from stock markets has come from reinvested dividends rather than price appreciation. Yield on cost is the figure that makes long holding periods vivid. A share bought at a 3% yield whose dividend grows 5% a year is yielding nearly 8% on the original purchase price after twenty years, regardless of what the current yield says. Outside a tax shelter, dividends are usually taxed as they are paid whether or not they are reinvested, which erodes the effect. That is the main practical argument for holding income-producing assets inside an ISA, a pension or their local equivalent.
How the Dividend Reinvestment Calculator works
Portfolio value with dividends reinvested against taking them as cash, with yield on cost. Over decades the reinvested share count accounts for a large share of total equity returns.
Also known as: drip calculator · how much do reinvested dividends add · yield on cost after 20 years · dividend compounding over time
Not financial advice. This calculator is for planning and illustration, not financial advice. Real products carry fees, taxes, and terms it does not model. Confirm figures with your lender or a qualified adviser before committing.
Frequently asked questions
How much difference does reinvesting make?
Over long periods, a great deal. On many long-run measures more than half of the total return from stock markets has come from reinvested dividends rather than from price appreciation.
What is yield on cost?
The current dividend as a percentage of what you originally paid. A share bought at a 3% yield whose dividend grows 5% a year yields nearly 8% on cost after twenty years.
Is a high dividend yield a good sign?
Not on its own. An unusually high yield often means the price has fallen because the market expects the dividend to be cut. Growth in the dividend matters more than its current level.
Does tax change the picture?
Substantially, outside a shelter. Dividends are usually taxed as they are paid whether reinvested or not, which is the main practical argument for holding income-producing assets in an ISA, pension or equivalent.
Are dividends better than buybacks?
They are the same thing in different clothes — both return cash to shareholders. Buybacks are more tax-efficient in most systems; dividends are more predictable and harder for management to quietly abandon.
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