Dividend Compound Interest Calculator

Dividend Reinvestment Calculator

Include Tax:

Tax Rate (%):

Initial Investment ($): Share Price ($): Dividend Amount ($): Dividend Frequency: Dividend Growth Rate (%): Share Price Growth (%): Extra Investment ($): Extra Invest Frequency: Length of Investment (years):

Compound Interest Calculator

What is Compound Interest?

Compound interest is a financial concept where interest is calculated not only on the initial principal but also on the accumulated interest from previous periods. This means you earn “interest on interest,” which can significantly increase the amount of interest earned or owed over time.

Dividend History

What is Dividend Compound interest?

Dividend compound interest refers to the process of reinvesting dividends received from a stock or other investment back into the same investment, thereby earning “interest on interest” over time. This means that each subsequent dividend payment will be larger because it is based on a growing principal amount that includes the previously reinvested dividends.

Dividend Calculators

Here’s how it works:

Initial Investment: You buy shares of a company that pays dividends.
Receive Dividends: The company pays you dividends based on the number of shares you own.
Reinvest Dividends: Instead of taking the cash, you reinvest the dividends to purchase more shares of the company.
Compound Growth: Each new share purchased also earns dividends, leading to exponential growth in the value of your investment over time.

For example, if you initially invest $1,000 in a dividend-paying stock with a 5% annual dividend yield and reinvest the dividends, your investment will grow much faster than if you had taken the dividends as cash.

Dividend compound interest can be a powerful strategy for long-term investors looking to maximize their returns.

Compound Interest Formula

The compound interest formula is used to calculate the amount of money accumulated after a certain number of years, including interest.

Formula:

A = P (1 + r/n)^(nt)

A = the amount of money accumulated after n years, including interest.
P = the principal amount (the initial sum of money).
r = the annual interest rate (decimal).
n = the number of times that interest is compounded per year.
t = the time the money is invested or borrowed for, in years.

Here’s an example calculation:

Example:

Suppose you invest $1,000 (P) at an annual interest rate of 5% (r = 0.05), compounded monthly (n = 12), for 10 years (t = 10):

A = 1000 (1 + 0.05/12)^(12 * 10)

A ≈ 1000 (1 + 0.004167)^(120)

A ≈ 1000 (1.004167)^(120)

A ≈ 1000 * 1.647

A ≈ 1647

After 10 years, your investment would grow to approximately $1,647 due to the effect of compound interest.