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Dividend DRIP Calculator

April 16, 2024
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Use this tool to analyse expected returns taking into account dividend reinvestments.

DRIP stands for Dividend Reinvestment Plan and is the act of buying additional shares with dividend payouts, and repeating this over a period of time.

The DRIP calculator can be used to determine potential returns from following this strategy.

Here: https://www.tipranks.com/tools/dividend-calculator

In my opinion, you should only apply this tool to companies paying a stable dividend. This means that resource companies or cylicals are less suitable to analyse using this tool.

Example:

Clientele (JSE:CLI)

Dividend yield: 10%

Current dividend yield

Dividend growth rate: 4% 

Assumption of future dividend growth

Tax: 20%

Current dividend tax rate

Expected share price performance: 1%

Expect share price to grow 1% per year

Holding period: 10 years

We analyse over next 10 years

Dividend frequency: Annual

Dividend payment is once a year

Results:

After 10 years your total return would be 182.37% or 10.94% CAGR (compound annual growth rate). R10000 would be R28237.33 after considering the dividend reinvestments and tax implications.

 


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