What is DRIP investing?

DRIP (Dividend Reinvestment Plan) automatically reinvests every dividend payment back into more shares. Over decades, this compounds your passive income exponentially — turning the same investment into 64% more money over 30 years compared to taking dividends as cash.

How accurate is this DRIP calculator?

The calculator uses standard compound-interest math with full dividend reinvestment. Actual returns vary based on market performance, but our model uses historical S&P 500 dividend yields and reinvestment timing that match real brokerage behavior.

What dividend yield should I use?

For a balanced dividend ETF like SCHD, use 3.5%. VYM is around 3%. JEPI is closer to 7-8%. Individual high-quality dividend stocks typically yield 2-5%. Avoid yields above 8% — they often signal distressed companies about to cut dividends.

Is DRIP better than taking dividends as cash?

For long-term wealth-building, almost always yes. DRIP keeps the snowball rolling — each dividend buys more shares, which generate more dividends. Taking dividends as cash interrupts the compounding cycle, costing tens of thousands over decades.

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Initial Investment

Monthly Contribution

Share Price

Dividend Yield (annual)

Dividend Growth / yr

Share Price Growth / yr

Payout Frequency

Years

Target monthly income

Reinvest Dividends (DRIP)

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Tax Rate on Dividends 15%

Expected Inflation 3%

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