💹 Dividend Reinvestment Simulator
What Is Dividend Reinvestment (DRIP)?
A DRIP (Dividend Reinvestment Plan) is a strategy where, instead of taking dividend payments as cash, you automatically use them to purchase additional shares of the same stock or fund. Each new share generates its own dividends — creating a powerful compounding cycle that grows your position over time without requiring fresh capital.
🔄 The snowball effect: Dividends → Buy more shares → Larger dividends → Buy even more shares → ...
DRIP vs. Cash Payouts
Reinvestment (DRIP)
Best fit for the accumulation phase. Every dividend goes immediately back to work, compounding for decades. There's no cash flow during the holding period, but the final portfolio is significantly larger.
Cash Payouts
Best fit for retirees or income-focused investors who need regular cash flow. Dividends provide steady passive income, but long-term wealth accumulation falls short of DRIP.
Things You Must Know Before Investing for Dividends
Korean Dividend Tax: 15.4%
Korean dividends are subject to a 15.4% withholding tax (14% income tax + 1.4% local income tax). This calculator displays pre-tax figures, so the actual cash you receive is 15.4% lower.
High-Yield vs. Dividend Growth
High-yield stocks deliver larger payments today but often have limited share-price upside. Dividend growth stocks start with a lower yield but consistently raise their payouts year after year — historically the better long-term choice.
Dividend Sustainability
Always check the payout ratio (dividends ÷ net income). A payout ratio above 80–90% may signal that future dividend cuts are on the table. Verify before you invest.
* Pre-tax estimates. Korean dividend withholding tax (15.4%) and trading fees are not reflected.
Educational use only — not financial advice.
Frequently Asked Questions
Q. Is DRIP really that powerful?
Yes. 4% yield + 6% price appreciation over 30 years gives DRIP ~1.8-2× the final value of cash dividends. The gap accelerates with time.
Q. How are dividend taxes different in Korea vs US?
Korea taxes dividends at 15.4%. US dividends withhold 30%; Korean investors pay an additional 15%. The calculator uses a flat tax input — confirm comprehensive taxation separately.
Q. What yield should I enter?
US dividend ETFs (SCHD/VYM) ~3-4%, Korean dividend stocks 3-5%, REITs 5-7%. Yields above 8% may be value traps.
Q. What price-appreciation assumption?
Dividend stocks usually grow slower than growth stocks (4-7%/yr). Stay conservative vs S&P 500's 7-10% average.
Q. Does adding monthly contributions help?
A lot. Dividends + new buys compound together and 2-3× the 30-year result. Automate a fixed monthly buy if possible.
Q. Can dividends fund retirement?
KRW 2M/month needs KRW 24M/year. At 4% yield that requires ~KRW 600M in assets. The simulator shows when you reach that target.
