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Dividend Reinvestment Plan: every dividend automatically buys more shares. See how compounding on top of share-price growth turbo-charges long-term returns.
Each year: (1) grow price by pg%, (2) grow dividend per share by dg%, (3) annual income = shares × new dividend, (4) if DRIP: buy income ÷ new price additional shares. Portfolio value = shares × price.
Every dividend buys more shares, which pay more dividends, which buy more shares. Over 20+ years the compounding effect is dramatic.
Yes — in a taxable account, reinvested dividends are still taxable income in the year received. Only inside an IRA/401(k) do you avoid this.
Most brokers now offer synthetic DRIP for any dividend-paying stock or ETF, including fractional shares — no need to enroll in a company plan.
S&P 500 dividend growth has averaged ~5–6%/yr over the past decades. Individual 'dividend aristocrats' have raised payouts 25+ years in a row.
No — set price growth = net-of-tax if you want an after-tax projection.
Results are estimates for educational purposes only and are not financial advice. Verify with a qualified professional before making decisions.
Last updated October 2026