Dividend reinvestment is one of the most powerful wealth-building strategies. Our dividend reinvestment calculator reveals how your portfolio value grows when dividends are reinvested versus not reinvesting them.

Reinvesting your dividends allows you to increase the number of shares that you own without forking over a dime in new money. You simply buy new shares with every dividend payment, and let the power of compounding take over. Over the long haul, reinvesting dividends really adds up, helping to exponentially increase the value of your portfolio. You can snowball your investment portfolio.

Simply put… without dividend reinvestment, you’re leaving money on the table. Check out how our dividend reinvestment calculator works below.

How Does Our Dividend Reinvestment Calculator Work?

• Initial Number of Shares: This is where you enter the amount of stock you have purchased.
• Initial Price per Share: This is the price you entered into the investment.
• Annual Dividend: How much income does the company pay you each year.
• Dividend Annual Growth Rate: How much you expect the dividend to grow each year.
• Stock Price Annual Growth Rate: How much you expect the share price to increase each year.
• Number of Years: How long your investment time frame is.
• Dividends Per Year: How many dividends the company pays per year.

Now that you’ve taken a look at the different variables for our dividend reinvestment calculator, you should think about setting up a dividend reinvestment plan. It’s an easy process that can snowball into a growing source of passive income.

Dividend Reinvestment Plan (DRIP)

Consider setting up a dividend reinvestment plan. Also known as a DRIP, a dividend reinvestment plan allows investors to reinvest their cash dividends in shares or fractional shares of the dividend-paying company. This action takes place at the dividend payment date. Most of the time, these shares can be acquired commission-free. Also, sometimes companies may offer shares at a discounted rate for divided reinvestments.

Many online brokers let you choose to set up a drip plan when buying stocks. It’s an option that might show up when putting in the order. And if you already hold a position and want to turn on automatic dividend reinvesting, you can contact your broker to learn how.

Dividend Reinvestments to Snowball Income

The dividend reinvestment calculator above gives great insight into the power of compounding wealth. It’s a powerful wealth-building strategy that is easy to understand and master. Although, there are some other useful investing tools to consider. To see a graph of your returns going forward, check out this investment calculator as well.

Another important piece to seeing dividend growth is picking the best stocks. There’s a lot of financial information out there and it can be a little overwhelming. That’s why it’s good to keep learning and exploring more investing opportunities…