Monthly Dividend Calculator

There's a reason Warren Buffett calls compound interest the eighth wonder of the world—and dividend reinvestment is one of the simplest ways to harness it.

This calculator shows you what happens when your dividends don't just sit in your account, but go back to work buying more shares. Enter your investment details, and you'll see exactly how that snowball effect plays out over 5, 10, or 20+ years.

Whether you're building toward retirement, creating a passive income stream, or just exploring what's possible with consistent dividend investing, the numbers here might surprise you. A modest 4% yield doesn't sound exciting until you see what it becomes after two decades of patient reinvestment.

When a company pays you a dividend, you have two choices: take the cash or use it to buy more shares. Dividend reinvestment means choosing the second option—automatically.

Here's why that matters.

Say you own 100 shares of a stock trading at $50, and it pays $2 per share annually. That's $200 in dividends. If you take the cash, you still own 100 shares next year. But if you reinvest, that $200 buys you 4 more shares. Now you own 104 shares, earning $208 in dividends. Reinvest again, and you own 108.16 shares.

Each year, the numbers get a little bigger. Your share count grows. Your dividend payments grow. And those growing dividends buy even more shares.

This is called a DRIP—Dividend Reinvestment Plan—and most brokerages offer it for free. Once you turn it on, it runs automatically. No decisions to make, no temptation to spend the dividends on something else.

The early years feel slow. But give it 15 or 20 years, and you'll look back wondering how your modest investment turned into something substantial.

Before you can project your returns, you need to understand dividend yield—the percentage that tells you how much income a stock generates relative to its price.

The calculation is simple:

Dividend Yield = (Annual Dividend ÷ Share Price) × 100

A $100 stock paying $4 per year has a 4% yield. A $25 stock paying $1 per year also has a 4% yield. The yield lets you compare apples to apples, regardless of share price.

A word of caution: When you see a 10% or 12% yield, don't get excited—get curious. Sky-high yields often mean the stock price has crashed (which mathematically inflates the yield) or the company is paying out more than it can sustain. Many investors have learned this lesson the hard way when a "great" high-yield stock cut its dividend by 50%.

The sweet spot for most dividend investors sits between 3% and 5%—high enough to generate meaningful income, low enough to suggest the payout is sustainable.

Let me show you something that changed how I think about dividend investing.

Imagine two people—let's call them Alex and Jordan—who each invest $20,000 in the same stock with a 4% dividend yield on the same day. The only difference: Alex takes the dividends as cash each quarter, while Jordan reinvests them.

After 25 years (assuming the stock price and dividend stay constant, just to isolate the reinvestment effect):

Jordan didn't add a single extra dollar. Same stock, same starting point, same time period. The only difference was what happened to the dividends.

This is compound growth in action. Jordan's dividends bought shares, those shares paid dividends, those dividends bought more shares—over and over for 25 years.

And here's what most people miss: the growth isn't linear. For the first 5-7 years, the difference between Alex and Jordan seems almost negligible. But compound growth is exponential. It starts slow, then accelerates. The magic happens in years 15-25, when all those reinvested dividends finally show their cumulative power.

The lesson? Start early, stay patient, and let time do the heavy lifting.

Getting your projection takes about 30 seconds:

1. Enter the share price The current price per share of the stock or ETF you're analyzing. You can find this on any financial website or your brokerage app.

2. Enter the annual dividend per share The total dividends paid per share over one year. If you only know the quarterly dividend, multiply by 4. For example, a stock paying $0.50 quarterly has an annual dividend of $2.00.

3. Enter your investment amount How much money you're putting in. The calculator will determine how many shares this buys at the current price.

4. Set your time horizon How many years do you want to project? For dividend reinvestment, longer is better—try 15 or 20 years to see the real compound effect.

5. Choose your compound frequency How often are dividends reinvested? Options range from yearly to daily. More frequent compounding generally produces slightly higher returns.

6. Review your results You'll instantly see your dividend yield, projected final balance, total growth percentage, profit from dividends, and annual income.

Pro tip: Run the calculator multiple times with different scenarios. Try extending your timeline by 5 years, or compare a 3% yield versus a 4% yield. Small differences in these inputs create surprisingly large differences in outcomes.

Profile: Maria, 35, wants to build long-term wealth without taking big risks.

Her investment:

• $12,000 initial investment
• Stock price: $60 per share (200 shares)
• Annual dividend: $1.80 per share (3% yield)
• Time horizon: 15 years
• Compound frequency: Quarterly

Results:

• Final portfolio value: approximately $18,700
• Total dividends reinvested: approximately $6,700
• Ending shares owned: 312
• Growth: 56%

Even with a conservative 3% yield, Maria's investment grows substantially through consistent reinvestment.

Profile: David, 45, has $40,000 to invest and wants income by age 65.

His investment:

• $40,000 initial investment
• Stock price: $80 per share (500 shares)
• Annual dividend: $3.60 per share (4.5% yield)
• Time horizon: 20 years
• Compound frequency: Monthly

Results:

• Final portfolio value: approximately $97,500
• Total dividends reinvested: approximately $57,500
• Ending shares owned: 1,219
• Growth: 144%

By retirement age, David's portfolio generates over $4,300 in annual dividends—enough to cover a meaningful chunk of expenses. And he still owns the shares, which continue growing.

The question: How much does compound frequency actually matter?

Test case: $30,000 invested at 5% yield for 25 years

The verdict: More frequent compounding helps, but the difference between quarterly and daily is only about 1.1% over 25 years. Don't stress about this variable—focus on yield, time horizon, and actually staying invested. Those factors matter far more.

When dividends compound more frequently, they start earning returns on themselves sooner. That's why monthly beats yearly—but the real-world impact is smaller than most people assume.

Here's the practical reality:

• Yearly: Some international stocks and older companies pay annually. You wait 12 months between reinvestments.
• Quarterly: This is how most U.S. dividend stocks pay. Reinvesting four times per year matches real-world behavior.
• Monthly: Common for REITs, bond funds, and some dividend ETFs. Slightly better compounding, plus steadier income if you're living off dividends.
• Daily/Weekly: Mostly theoretical. No stocks actually pay this frequently. Useful for seeing the mathematical maximum, but not for planning.

Recommendation: Use quarterly compounding for most projections. It reflects how dividend investing actually works and gives you realistic expectations. If you're analyzing monthly-paying ETFs, use monthly.

Time beats timing. Don't wait for the "perfect" entry point. The best time to start reinvesting dividends was 20 years ago. The second-best time is today.

Dividend growth matters more than current yield. A stock yielding 2.5% that raises its dividend 8% annually will generate more income than a 4% yielder with flat dividends—give it about 7 years.

Diversify across sectors. Don't load up entirely on utilities or REITs just because they have high yields. A dividend cut in a concentrated position hurts. Spread your holdings across consumer staples, healthcare, industrials, financials, and other sectors.

Reinvest in tax-advantaged accounts first. Every dividend reinvested in your IRA or 401(k) compounds without annual tax drag. Over 25 years, this can add 15-20% to your ending balance compared to a taxable account.

Track your yield on cost. As companies raise dividends, your effective yield on your original purchase price increases. That $50 stock you bought years ago at 3% might be yielding 6% on your original cost today—even if the current yield for new buyers is still 3%.

Stay patient during market drops. When prices fall, your reinvested dividends buy more shares. Some of the best long-term returns come from steadily reinvesting through bear markets when shares are cheap.

This calculator shows projections, not guarantees. Companies can cut dividends. Stock prices fluctuate. Use these numbers for planning, but build in a margin of safety. If you need $50,000 in 20 years, aim for a projection of $65,000.