DRIP Calculator (Dividend Snowball)

What is a DRIP?

A DRIP (Dividend Reinvestment Plan) is a setting you can turn on in almost any brokerage account (like Fidelity, Vanguard, or Robinhood). Instead of receiving your quarterly stock dividends as cash in your account, the brokerage automatically uses that cash to buy fractional shares of the same stock.

The Snowball Effect

Reinvesting dividends creates a powerful snowball effect. When your dividend buys more shares, your share count increases. The next time a dividend is paid, you receive an even larger payout because you own more shares. That larger payout buys even more shares, accelerating the growth exponentially.

Why You Should (Usually) Turn on DRIP

• Zero Friction: It happens automatically in the background, preventing you from emotionally spending your dividend cash.
• Dollar-Cost Averaging: Because you are buying shares automatically on the dividend payout date, you naturally buy more shares when the market is down and fewer shares when the market is up.
• Massive Long-Term Difference: Over a 30-year period, a portfolio with reinvested dividends can easily be worth double or triple the value of a portfolio where the dividends were withdrawn as cash.