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Dividend reinvestment: Calculate the value over time

When a stock dividend is used to buy more shares, the new shares can also earn a return. The calculator shows the difference between reinvesting the dividend and leaving it as cash without interest.

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Applies to the amounts in this calculator.

The amount you invest at the start.

EUR

The price increase per year in percent, excluding dividends.

%

The dividend for the year as a percentage of the value of the shares at the start of the year.

%

How many whole years the investment runs.

years

Before tax and costs. Fixed annual price growth and dividend yield are assumptions. Cash dividends earn no interest.

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Worked example
  • Starting amount: 100,000.00 EUR
  • Annual price growth: 7 %
  • Dividend yield: 3 %
  • Number of years: 20 years

Result

Value with reinvestment

672,750 EUR

Value of the shares without reinvestment

386,968 EUR

Accumulated dividends

122,986 EUR

Total value without reinvestment

509,955 EUR

Difference

162,795 EUR

Working

  1. with reinvestment = K × (1 + (g + d)/100)ⁿ
    100,000.00 EUR × (1 + (7 + 3)/100)^20 = 672,749.99 EUR
  2. shares without reinvestment = K × (1 + g/100)ⁿ
    100,000.00 EUR × (1 + 7/100)^20 = 386,968.45 EUR
  3. accumulated dividends = d% of the value at the start of each year for n years
    3 % of the starting value in each of 20 years = 122,986.48 EUR
  4. total without reinvestment = shares + dividends
    386,968.45 EUR + 122,986.48 EUR = 509,954.92 EUR
  5. difference = with − without
    672,749.99 EUR − 509,954.92 EUR = 162,795.07 EUR

Enter the starting amount, annual price growth, dividend yield and number of years. The result keeps the value of the shares separate from any cash payouts.

How are dividends included?

Here the year's dividend is calculated as a percentage of the value of the shares at the start of the year. The reinvestment happens at the end of the year. The price growth is entered excluding dividends.

Under these assumptions, the year's total growth factor with reinvestment is 1 + price growth + dividend yield, when the percentages are written as decimals. If you have already entered a total return, dividends should not be added again.

Example over 20 years

With 100,000, 7% annual price growth and a 3% dividend, the value is about 672,750 after 20 years with reinvestment.

Without reinvestment, the shares are worth about 386,968. On top of that come about 122,986 in accumulated dividends. The total value is therefore about 509,955 when the cash earns no interest.

Payouts and reinvestment serve different purposes

Dividends paid out can be used for ongoing expenses. Reinvestment instead increases the amount that remains invested. The comparison should therefore include both the holding and the money you have been paid.

The model uses fixed annual percentages and ignores tax and trading costs. Actual dividends and prices vary. If you want to compare different combinations of price growth and dividends, you can use the dividend versus growth calculator.