Dividend reinvestment against taking the cash. Reinvesting compounds the dividend stream itself, and yield on original cost is the figure that shows why long holders of dividend growers stop caring about the current yield.
Also called: dividend reinvestment calculator, dividend compounding.
$319,950.09 with dividends reinvested against $193,484.22 without, a difference of $126,465.87. Your yield on the original cost has grown from 3.5% to 17.11%.
An estimate, not an offer or a guarantee. Projected returns assume the rate you entered holds for the whole term, which no market does.
This is what the calculation gives for the numbers you entered. It is an estimate, not advice, and it knows nothing about your situation beyond those numbers. Rules for United States change on a published schedule; the effective date is shown on every rule-based tool.
Each year dividends are paid, taxed, and used to buy more shares, which pay dividends the following year. Over twenty years that second-order effect is large. Yield on cost is the useful measure here: a stock bought at a 3.5 percent yield whose dividend grows six percent a year yields over eleven percent on the original purchase price after twenty years, regardless of what the current yield says.
dividends after tax buy more shares, which then pay dividends themselvesEach of these is asserted on every build. If a change to the engine ever moved one of these answers, the build would fail before the page could print it.
Value with reinvestment$319,950.09
50,000 x 1.07^20. 1.07^20 = 3.86968446, so the no-reinvestment path ends at 193,484.22.
Open this exampleValue with reinvestment$193,484.22
boundary: with no dividend there is nothing to reinvest, so the two paths are the same path
Open this exampleFormula version 1.0.0 · definition 1.0.0 · United States · Report a problem with this calculator