Finance Calc App

Canada Dividend & DRIP calculator

See how dividends compound when you reinvest them. Project your portfolio's value with a dividend reinvestment plan (DRIP) versus taking the income as cash, plus your growing dividend income over time.

By Mitch Duncan Last reviewed Methodology

Your investment

Annual dividends as a percentage of the portfolio's value. Broad index funds are often 1.5–3%; income/dividend funds 4–6%.

Capital appreciation on top of dividends. As the portfolio grows, the dividends it pays grow with it.

Value with dividends reinvested
$233,047.86
Value if dividends taken as cash
$109,556.16
Reinvesting dividends (DRIP) leaves you about $63,935.54 better off after 20 years than taking the same dividends as cash — the compounding effect of dividends buying more holdings that pay still more dividends.
Over 20 years
Total contributed
$50,000.00
Dividends reinvested (DRIP)
$91,523.93
Dividends taken as cash (no DRIP)
$59,556.16
Dividend income in year 20
$4,213.70
Total dividends reinvested
$91,523.93
Effective yield on cost (year 1)
4.00%

A projection using constant yield and growth rates — real dividends and prices vary year to year, and companies can cut payouts. Figures are pre-tax: dividend tax differs by country (see below). This is an estimate, not investment advice.

Want the full picture? Dividend Investing and DRIP Explained →

How dividends are taxed in Canada

Reinvesting dividends compounds your returns, but in a non-registered (taxable) account Canadian dividends are taxable when paid. Canada uses a gross-up and dividend tax credit system rather than flat dividend rates:

Shelter dividends in a TFSA or RRSP

Hold dividend payers in a TFSA and the income — reinvested or withdrawn — is completely tax-free. An RRSP defers tax until withdrawal and, helpfully, is exempt from US withholding tax on US dividends under the Canada–US treaty. Many brokers offer commission-free DRIP, though some reinvest only in whole shares.

What this calculator shows

The figures are pre-tax. Inside a TFSA or RRSP that's an accurate view of DRIP compounding; in a taxable account, the gross-up/credit system means eligible Canadian dividends are taxed more lightly than interest or foreign dividends — your effective rate depends on your province and income.

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Frequently asked questions

What is a DRIP (dividend reinvestment plan)?
A DRIP automatically uses the dividends a holding pays to buy more of it, instead of paying you cash. Those extra shares then pay their own dividends, which buy still more — so your income and capital compound together. Many brokers and companies offer DRIP for free, often including fractional shares.
How much difference does reinvesting dividends make?
Over long periods, a lot. Reinvested dividends compound on top of price growth, and historically they've accounted for a large share of the stock market's total long-run return. The calculator above shows your portfolio's value with dividends reinvested versus taken as cash, so you can see the gap for your own numbers.
What is dividend yield?
Dividend yield is the annual dividend expressed as a percentage of the share price — a 4% yield means a 100 investment pays about 4 a year in dividends. Broad index funds often yield 1.5–3%, while dedicated income or dividend funds may yield 4–6%. A very high yield can be a red flag that the market expects a cut.
What is yield on cost?
Yield on cost measures dividends against what you originally paid, rather than today's price. If a company keeps raising its dividend, your yield on cost rises over the years even as the current yield stays steady — which is why long-term dividend-growth investors focus on it.
Are dividends taxed if I reinvest them?
In a regular taxable account, usually yes — reinvested dividends are still taxable in the year they're paid, even though you never received cash. The rules and rates vary by country. Holding dividend investments inside a tax-advantaged account (such as an ISA, IRA, TFSA, or superannuation) can reduce or remove that tax — see the region-specific notes below the calculator.
Are dividends guaranteed?
No. Companies set dividends at their discretion and can cut or suspend them, especially in downturns. A projection that assumes a steady yield is a planning tool, not a promise — diversifying across many dividend payers or using a fund reduces the impact of any single cut.

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