DRIP Comparison Tool
Should you reinvest dividends or take the cash? This timeline shows how the two strategies diverge over time.
Wealth Comparison Over Time
How DRIP Works Over Time
Year 1-5: Small differences begin. DRIP buys fractional shares, compounding starts slowly.
Year 5-10: Gap widens noticeably. Reinvested dividends now generate their own dividends.
Year 10-20: Compounding accelerates. DRIP portfolio is significantly larger.
Year 20+: The snowball effect. Earlier reinvested dividends contribute more than new ones.
About This Tool
Name: DRIP (Dividend Reinvestment Plan) Comparison Tool
Scene: Use when deciding whether to enroll in a DRIP program or take cash dividends from stocks/funds.
Method: Models two scenarios: one where dividends are reinvested (buying more shares) and one where dividends are taken as cash (taxed annually).
Interpretation: The DRIP advantage shows the power of compounding dividends. Even modest yields create significant gaps over decades.
Disclaimer: Assumes constant yield and growth. Real dividends fluctuate. Not financial advice.