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.
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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 do you expect the dividend to grow each year.
- Stock Price Annual Growth Rate: How much do you expect the share price to increase each year.
- Number of Years: How long is your investment time frame.
- Dividends Per Year: How many dividends does the company pay per year.
Now that you’ve taken a look at how our dividend reinvestment calculator works, you should think about setting up a dividend reinvestment plan. It’s an easy process that can lead to 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.
To set up a drip plan, many online brokers let you choose when buying dividend 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 reinvesting, you can contact your broker to learn how.
Dividend Calculators to Snowball Income
The dividend reinvestment calculator above gives great insight into the power of compounding wealth. 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 info out there and it can become a little overwhelming. That’s why it’s good to keep learning and exploring more investing opportunities…