See how reinvesting dividends accelerates your portfolio growth. Compare the difference between taking dividends as cash vs. reinvesting them over time.
Once you sign up, your accounts, income, expenses, and goals update these numbers automatically.
Dividend reinvestment means automatically using your dividend payments to purchase more shares of the same stock or fund. Instead of receiving cash, your dividends buy fractional shares, which then generate their own dividends. This creates a powerful compounding loop that accelerates portfolio growth.
Historically, dividends have contributed about 40% of the stock market's total returns. A $10,000 investment in the S&P 500 in 1960 would be worth roughly $70,000 with price appreciation alone, but over $500,000 with dividends reinvested. The difference is entirely due to compounding.
Some companies increase their dividends every year. Companies that have raised dividends for 25+ consecutive years are called 'Dividend Aristocrats.' Investing in dividend growth stocks means your income stream increases over time, providing a natural hedge against inflation.
This calculator models total portfolio growth with dividends reinvested. The return rate represents your total return (price appreciation + dividend yield). Dividends are assumed to be automatically reinvested monthly, buying additional shares that generate their own returns. This compounds more aggressively than price-only growth.
Starting with $50,000 in a dividend ETF yielding 2% with 6% price growth (8% total return), contributing $1,000/month: after 20 years you'd have approximately $685,000. Without reinvesting dividends (6% return only), the same portfolio reaches just $520,000 — a $165,000 difference from reinvestment alone.
The return rate in this calculator should represent total return (dividends + price appreciation). If your fund yields 2% and you expect 6% price growth, use 8%.
Compare the projection with a lower return rate (no reinvestment) to visualize how much dividend reinvestment contributes over your time horizon.
Hold dividend-paying investments in tax-advantaged accounts (IRA, 401k) when possible. In taxable accounts, dividends are taxed annually even when reinvested, creating tax drag.
Don't chase the highest dividend yields. A 7% yield with no growth often underperforms a 2% yield with 8% annual dividend increases over a 10+ year horizon.