Unlock the power of compounding with our DRIP Total Return Calculator. Analyze how reinvesting dividends, combined with share price appreciation, can significantly grow your investment portfolio over your chosen reinvestment period. Start visualizing your financial future today!
Formula:
The DRIP Total Return is not a single, simple formula due to its iterative nature involving compounding. It's calculated period-by-period as follows:
1. Shares Owned: Scurrent (Starts as `Initial Investment / Initial Share Price`)
2. Share Price: Pcurrent (Starts as `Initial Share Price`)
3. Dividend Yield Per Period: Dperiod = `Annual Dividend Yield / Dividend Frequency`
4. Share Price Growth Factor Per Period: Gperiod = `(1 + Annual Share Price Growth Rate)(1 / Dividend Frequency)`
For each period:
a. `Dividend Earned` = Scurrent * Pcurrent * Dperiod
b. `Shares from Reinvestment` = `Dividend Earned` / Pcurrent
c. Scurrent = Scurrent + `Shares from Reinvestment`
d. Pcurrent = Pcurrent * Gperiod
After all periods, the Total Return = (Sfinal * Pfinal) - `Initial Investment`