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Ending shares{{ resultsReady ? formatShares(computation.values.ending_shares) : '—' }} Retained cash{{ resultsReady ? formatCurrency(computation.values.cash_balance) : '—' }} Yield on cash invested{{ resultsReady ? formatPercent(computation.values.yield_on_cost) : '—' }}
Shares held before period 1.
$
The same declared price is used for contribution and reinvestment purchases in period 1.
Yield mode derives the initial annual dividend once; later dividend growth stays independent of price growth.
$/ share / year
The annual amount is divided evenly across the selected payment frequency.
%
Applied to starting price only; this is not a forecast yield.
Use the issuer or plan's expected cash-dividend cadence.
years
Whole years in the first projection phase.
%
This tool does not forecast or fetch market prices.
%
Use −100% to model the dividend falling to zero.
$/ payment
Set $0 to model dividend reinvestment without new contributions.
%
Use 0% for cash dividends, 100% for full reinvestment, or an exact partial policy.
%
Confirm actual tax treatment independently for the account and jurisdiction.
Applied separately to contribution and dividend purchases.
$/ payment
The neutral default is $0; fees do not apply to contributions.
Each later phase starts after the preceding phase ends.
PhaseYearsPrice growthDividend growthContribution / payment
{{ phase.index }}
%
%
$
Projection summary
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Calculation method:
ending shares = opening shares + contribution shares + reinvested shares

Each period grows declared price and dividend assumptions, buys contributions first, calculates the dividend, deducts estimated tax and fee, then applies the selected share-purchase rule.

Scenario only: verify current dividend declarations, execution prices, plan terms, fees, fractional-share treatment, and tax guidance. Reinvested dividends may still be reportable income.

The chart renderer is unavailable. The same values remain available in the ledger.

PeriodPhasePriceOpening sharesContributionGross dividendEst. taxFeeReinvestedEnding sharesCashTotal valueCopy
{{ row.label }}{{ row.phase }}{{ formatCurrency(row.share_price) }}{{ formatShares(row.opening_shares) }}{{ formatCurrency(row.contribution) }}{{ formatCurrency(row.gross_dividend) }}{{ formatCurrency(row.estimated_tax) }}{{ formatCurrency(row.reinvestment_fee) }}{{ formatCurrency(row.reinvested_amount) }}{{ formatShares(row.ending_shares) }}{{ formatCurrency(row.cash_balance) }}{{ formatCurrency(row.total_value) }}
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Dividend reinvestment uses a cash distribution to buy more shares of the same investment. Those additional shares can receive later dividends, creating a compounding cycle. The outcome depends on more than the headline dividend yield because purchase price, dividend changes, taxes, fees, payment timing, and fractional-share rules all affect how much cash becomes new ownership.

A dividend reinvestment plan (DRIP) may be offered by a company, transfer agent, fund, or brokerage. Plan terms differ. Some purchase fractional shares, some hold cash until a whole share can be bought, some charge a fee, and some use an execution price set at a particular time or as an average. The governing disclosure determines the real transaction.

Projections also need a clear distinction between an assumption and a forecast. A steady annual share-price growth rate produces a smooth scenario, but market prices do not move that way. Dividend growth is independent of price growth, and a company can reduce, suspend, or eliminate its dividend even while its share price rises.

Reinvestment does not usually make dividend income disappear for tax purposes. In a taxable U.S. account, dividends used to buy more shares can still be reportable income, and each purchase can create tax-basis records. Account type, jurisdiction, dividend classification, discounts, and service charges can change the treatment.

A period-by-period projection is useful for comparing declared scenarios, testing plan terms, and seeing how share count develops. It is not a prediction of market value or a substitute for the issuer's dividend declaration, the plan disclosure, brokerage records, or tax guidance.

How to Use This Tool:

Build one internally consistent scenario and keep declared rates separate from current market facts.

  1. Enter Starting shares and the starting share price. The same declared price is used for contribution and reinvestment purchases in the first payment period.
  2. Choose annual dividend per share or annual dividend yield. Yield mode derives the initial annual dividend once from starting price; later dividend growth does not follow price growth automatically.
  3. Select annual, semiannual, quarterly, or monthly payments, then define the first projection phase with whole years, annual price growth, annual dividend growth, and any contribution made each payment.
  4. Set the after-tax dividend share to reinvest, estimated tax deduction, reinvestment fee, and whole- or fractional-share purchase rule. Use values from the actual plan when available.
  5. Add phases only when assumptions genuinely change. Keep the combined projection at 50 years or fewer and no more than 600 payment periods, then inspect the payment ledger for the first few periods before trusting the ending summary.

Interpreting Results:

Total value equals ending stock value plus retained cash under the declared scenario. Compare it with Cash invested, which includes the starting shares valued at starting price plus later contributions. Their difference is not a tax-adjusted investment return because the projection does not model sales, cost basis, capital gains, or time-weighted performance.

  • Ending shares shows the direct effect of contributions and reinvestment. Whole-share mode can leave cash uninvested when a purchase amount is below the share price.
  • Cumulative gross dividends, estimated tax, fees, and dividend cash reinvested show why not every declared dividend dollar becomes shares.
  • Ending annualized dividend extends the last per-payment dividend across one year. It is a run-rate under the final assumption, not a guaranteed future payment.
  • Yield on cost divides that annualized dividend by modeled cash invested. It is not current yield and should not be compared with total return.

Review early ledger rows whenever the result changes sharply. A mistaken payment frequency, percent entered as a dollar amount, double-counted fee, or unsupported fractional-share assumption compounds through every later period.

Technical Details:

The scenario advances one dividend payment period at a time. Annual price and dividend growth assumptions are converted to equivalent periodic rates so compounding across the selected payment frequency reproduces the entered annual growth.

Formula Core:

The initial annual dividend comes either directly from annual dividend per share or once from starting price and starting dividend yield. Every later period uses the independently grown dividend per payment.

d0 = annual dividend per share or P0×y100 dpayment,0 = d0f gperiod = (1+gannual100)1f-1 Dt = Seligible×dpayment Creinvest = (Dt-Dt×T100)×R100-F Sreinvested = max(0,Creinvest)Pt

f is payments per year; P is share price; S is share count; D is gross dividend cash; T is the estimated tax percentage; R is the reinvestment percentage; and F is the fee actually applied. The applied fee cannot exceed the dividend cash allocated for reinvestment. In whole-share mode, reinvested shares are rounded down and the unused purchase cash is retained.

Mechanism Core:

OrderPeriod actionEffect
1Grow price and dividend after period 1Applies the active phase's equivalent periodic rates
2Buy shares with the period contributionNew contribution shares are eligible for the same period's dividend
3Calculate gross dividendEligible shares multiplied by dividend per share
4Deduct estimated tax and allocate the selected shareOnly allocated after-tax cash proceeds to reinvestment
5Apply fee and purchase ruleBuys fractional shares exactly or whole shares by rounding down
6Carry forward shares and cashUnused contribution cash and dividend cash remain in cash balance

With 10 shares at $100, a $4 annual dividend per share, one annual payment, full reinvestment, no estimated tax or fee, and fractional shares enabled, the $40 dividend buys 0.4 share. Ending shares are 10.4, stock value is $1,040, and annualized dividend income at the unchanged rate is $41.60.

Money is retained at full calculation precision and displayed to cents. Share counts display up to six decimal places. Price and dividend growth may range down to -99% and -100% respectively; a -100% dividend-growth phase reduces later dividend payments to zero.

Limitations:

This is an educational scenario model, not financial, investment, or tax advice.

  • No market prices, dividend declarations, plan terms, or tax rates are fetched. Every future value follows the assumptions entered.
  • The model excludes price volatility within a period, execution delays, bid-ask spreads, discounts, stock splits, mergers, foreign exchange, withholding details, and sale taxes.
  • The estimated tax percentage is a cash-flow deduction only. It does not determine qualified-dividend status, account-specific tax, cost basis, or filing obligations.
  • Fractional-share availability, fees, purchase timing, and residual-cash treatment vary by issuer and brokerage.
  • Dividends and share prices can fall. A smooth positive scenario should not be interpreted as a forecast or guaranteed return.

References: