DRIP Calculator (Dividend Reinvestment)

We approximate the combined annual return by assuming dividends are paid and immediately reinvested and that the underlying share price follows a steady annual growth rate. The effective annual return is computed as (1 + dividend_yield) × (1 + price_growth) − 1 to reflect dividends being reinvested and participating in price growth.

One-time initial amounts grow by compounding the effective annual return for the projection period. Recurring yearly contributions are treated as end-of-year payments and projected using the closed-form future value of an annuity under the same effective annual return.

This approach is computationally simple, stable, and suitable for rapid sensitivity testing. It is an approximation — if you require exact tax-aware or transaction-level accounting (per dividend payment, fractional shares, commissions, or mid-period contributions), use a transaction ledger or statement-level simulator.