How does dividend reinvestment (DRIP) accelerate compound wealth?

A Dividend Reinvestment Plan (DRIP) automatically uses dividend payouts to purchase additional shares. Each new share increases your future dividend payout, creating an exponential 'snowball' where dividends buy shares that pay more dividends.

What is Yield on Cost (YOC)?

Yield on Cost measures annual dividend income divided by your original cost basis. As companies grow their dividends each year, your Yield on Cost can rise from 3% initially to 15%+ on your original invested principal.

Dividend Yield & Monthly Paycheck Calculator

Model monthly passive dividend income, DRIP compound compounding, yield on cost (YOC), and tax-adjusted cash flow milestones.

Portfolio & Dividend Assumptions

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Popular Dividend Presets

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Reinvest Dividends (DRIP Auto-Compound)

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Annual Growth & Compounding Schedule

Year	Portfolio Val	Monthly Div	Annual Div	Yield on Cost

Frequently Asked Questions: Dividend Wealth & DRIP

What is the difference between Dividend Yield and Dividend Growth Rate?

Dividend Yield is the current annual dividend payout divided by the current share price (e.g. 3.5%). Dividend Growth Rate is the annual percentage increase in the dividend payment per share over time (e.g. 8% annual increase). High dividend growth rapidly compounds into double-digit Yield on Cost over 10+ years.

How does DRIP (Dividend Reinvestment Plan) beat taking cash?

When DRIP is activated, every quarterly or monthly dividend check immediately purchases additional shares at prevailing prices. During market pullbacks, your reinvested dividends buy more shares at discount prices, exponentially accelerating wealth accumulation.

Are dividends taxed differently than regular income?

In taxable brokerage accounts in the US, Qualified Dividends receive favorable capital gains tax rates (0%, 15%, or 20% depending on income bracket), whereas Ordinary / Non-qualified dividends (such as REITs or option premiums) are taxed at standard ordinary income tax rates.