Monthly Dividend DRIP Calculator

Formula

To calculate the monthly dividend drip:

\[ D = (N \times d) + (N \times d \times r) \]

Where:

$D$ is the monthly dividend drip
$N$ is the number of shares
$d$ is the dividend per share in dollars
$r$ is the reinvestment rate as a decimal

What is a Monthly Dividend DRIP?

A monthly dividend drip (Dividend Reinvestment Plan) is a program that allows investors to reinvest their cash dividends into additional shares or fractional shares of the underlying stock on the dividend payment date. This process helps in compounding the investment over time as the dividends are used to purchase more shares, which in turn generate more dividends. This method is particularly beneficial for long-term investors looking to maximize their returns through the power of compounding.

Example Calculation 1

Let's assume the following values:

Number of Shares = 100
Dividend per Share = $0.50
Reinvestment Rate = 5%

Using the formula:

\[ D = (100 \times 0.50) + (100 \times 0.50 \times 0.05) = 50 + 2.50 = 52.50 \]

The Monthly Dividend DRIP is $52.50.

Example Calculation 2

Let's assume the following values:

Number of Shares = 200
Dividend per Share = $1.00
Reinvestment Rate = 3%

Using the formula:

\[ D = (200 \times 1.00) + (200 \times 1.00 \times 0.03) = 200 + 6 = 206 \]

The Monthly Dividend DRIP is $206.00.