Question 1

Why are dividend growth and price growth separate inputs?

Accepted Answer

A company's dividend per share and its stock price don't necessarily grow at the same rate — a company can raise its dividend faster than its stock price moves, or vice versa. Keeping them separate gives a more realistic projection than assuming a fixed yield forever.

Question 2

What is DRIP?

Accepted Answer

Dividend reinvestment (DRIP) means every dividend payment automatically buys more shares instead of being paid out as cash. Over long periods this compounds meaningfully, since each reinvestment buys shares that then earn their own future dividends.

Question 3

Does this account for dividend taxes?

Accepted Answer

No — this projects gross dividend growth and reinvestment. In a taxable account, dividends are typically taxed in the year received (even if reinvested), which would reduce the amount actually available to reinvest. Tax-advantaged accounts like a Roth or traditional IRA avoid this drag.

Dividend Growth & Reinvestment Calculator

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