How much does DRIP add to total return?

Historically, dividends have accounted for 40% of total stock market return. Reinvesting dividends compounds the income stream. $10,000 in the S&P 500 in 1994 grew to approximately $214,000 by 2024 with reinvestment vs approximately $120,000 without.

Is DRIP tax-efficient in a taxable account?

No — reinvested dividends are still taxable in the year received even though you did not receive cash. This creates a more complex cost basis but the compounding benefit typically outweighs the tax drag.

Which accounts benefit most from DRIP?

Tax-advantaged accounts such as IRA and 401k benefit most from DRIP since reinvested dividends grow tax-deferred or tax-free. In taxable accounts, tax-managed funds with low dividends are more efficient.

Dividend Reinvestment (DRIP) Growth Calculator

Model portfolio growth when dividends are automatically reinvested. Shows the compound growth impact of DRIP vs taking dividends in cash over 10-30 years.

Principal ($)

Annual Rate (%)

Years

Compounding / Year

$ Finance Disclaimer: These calculators are for educational and illustrative purposes only. Results do not constitute financial advice. Consult a licensed financial advisor before making investment or borrowing decisions.

How to Use

Enter the values for the scenario you are assessing. Model portfolio growth when dividends are automatically reinvested. Shows the compound growth impact of DRIP vs taking dividends in cash over 10-30 years. Use the drip calculator result to inform your calculation.

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Dividend Reinvestment (DRIP) Growth Calculator

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Frequently Asked Questions

How much does DRIP add to total return?

Is DRIP tax-efficient in a taxable account?

Which accounts benefit most from DRIP?