compoundcoast
Accumulate · DRIP

Dividend Snowball — DRIP with real taxes

Reinvest every dividend and watch the share count snowball. This one derives yield as D/P each year (dividend growth and price growth are separate inputs, so return is never double-counted), taxes qualified vs non-qualified dividends with the 2026 LTCG brackets + 3.8% NIIT, reinvests only the after-tax dollars, and can drop a one-time −30% dividend cut on the path. Every figure is a low/base/high scenario range, not a single promise.

LTCG + NIIT · Rev. Proc. 2025-32 / IRC §1411 · asOf 2025-10 S&P 500 yield anchor ≈1.1% · multpl · asOf 2026-06 Updated 2026-07-22

Assumptions

live · derived D/P, after-tax DRIP
Lump invested today; every dividend it throws off is reinvested.
Annual steps; dividends are paid and reinvested once a year at that year-end price.
Year-1 D/P only — after that, yield is derived, never pinned. The S&P 500 itself yields ≈1.1% (multpl, asOf 2026-06); 3–4% implies a dividend-tilted portfolio.
Growth of dividends per share. S&P 500 long-run ≈5%/yr nominal (multpl).
Separate from dividend growth — if prices outrun dividends, the running yield falls, and reinvested dollars buy fewer shares. That is the honest coupling.
Account type
Roth runs the identical path with zero dividend tax — the gap between the two is your compounding tax drag.
Qualified dividends (61-day holding within the 121-day window, IRS Pub. 550) use LTCG rates; the rest is taxed as ordinary income. REITs and bond funds are mostly non-qualified.
Filing status
Sets the LTCG bracket and the NIIT threshold your dividends stack into.
Sets which LTCG bracket (0/15/20%) the qualified slice stacks into, your marginal ordinary rate, and whether the 3.8% NIIT bites (MAGI over $200k single / $250k MFJ).
100 bps = 1.00%/yr, dragged off the share-price path.
Dividend-cut stress (−30% once)
One-time −30% level cut to dividends per share; growth resumes from the cut level, so the dent is permanent. 2008–2010 realized ≈−24% — the preset is deliberately harsher.
Earlier cuts hurt more — every later year compounds from the dented base.
Set your inputs to project the snowball across low / base / high scenarios.
$—
Portfolio value — Dividend tax paid — ▲ —
Base-scenario portfolio value Scenario range (low–high) Net annual dividend income
Set your inputs — this rolls a low, base and high growth scenario, reinvests only after-tax dividends, and derives yield as D/P every year. The shaded band is the honest part: the answer is a range, not one number.

Portfolio value range

year-N · low · base · high scenario

Coral = the low-growth scenario, green = the base scenario, lime = the high-growth scenario. An illustrative scenario spread (dividend growth ∓3pp, price growth ∓4pp), not a measured distribution.

— Yield on cost, final yr *
— Effective dividend tax rate

* Yield on cost is a vanity metric: it divides today's dividend by a price that no longer exists. It measures how long you've held, not the return available on your money today — that is the running D/P in the year-by-year table below.

Methodology & sources
Year-by-year breakdown ›
YrYield D/PGross divTaxReinvestedSharesValue
Adjust the inputs to fill the table.

Base scenario. Yield is the ratio of that year's dividend per share to that year's price — it drifts with your two growth inputs instead of being held fixed.

Show the math ›
Run the projection to see the worked numbers for your inputs.
Assumptions & sources ›
AssumptionValueSource · asOf
Qualified dividends / LTCG brackets 0% ≤ $49,450 · 15% ≤ $545,500 · 20% above (single, taxable income) IRS Rev. Proc. 2025-32 §2.03, tax year 2026 · asOf 2025-10
Non-qualified dividends marginal ordinary brackets (10–37%) IRS Rev. Proc. 2025-32 §2.01 · asOf 2025-10
NIIT 3.8% on lesser of NII or MAGI over $200k/$250k IRC §1411 / Form 8960 — thresholds statutory, not indexed · asOf 2025-10
Standard deduction $16,100 single · $32,200 MFJ IRS Rev. Proc. 2025-32 §2.15 · asOf 2025-10
Market yield anchor S&P 500 ≈1.1% trailing multpl / GuruFocus · asOf 2026-06
Dividend growth anchor ≈5%/yr nominal long-run DPS multpl, S&P 500 dividend growth by year · asOf 2026-06
2008 cut reference ≈−24% DPS peak-to-trough 2008→2010 S&P 500 DPS series (Shiller/multpl) · asOf 2026-06 · stress preset −30% is harsher on purpose
Scenario band div growth ∓3pp · price growth ∓4pp, shifted together illustrative spread, not a measured percentile distribution — sized to the per-decade variation of S&P DPS growth

Simplifications: annual (not quarterly) dividends, reinvested at year-end prices; state tax not modeled; taxes assumed paid from the dividend itself; MAGI treated as constant across years. Federal tax parameters are tax-year 2026 and expire with it — the data gate fails the build when they go stale.

Common questions

What is a dividend snowball? ›

A dividend snowball reinvests every dividend a portfolio pays, buying more shares that then pay their own dividends, so the share count compounds over time. This calculator reinvests only the after-tax dollars in a taxable account and can run the identical path in a Roth with zero dividend tax. It projects portfolio value and net dividend income as a low, base, and high scenario range — three deterministic paths, not measured percentiles.

How is a DRIP taxed in a taxable account? ›

In a taxable account, reinvested dividends are still taxable in the year they are paid. This engine taxes the qualified share at the 2026 long-term capital gains brackets, taxes the rest at ordinary rates, and applies the 3.8 percent net investment income tax when MAGI passes $200k single or $250k married joint, then reinvests only what remains. Running the same path as a Roth shows the compounding tax drag as the gap between them.

What is yield on cost and does it matter? ›

The page calls yield on cost a vanity metric because it divides today's dividend by a purchase price that no longer exists. It measures how long you have held rather than the return available on your money today. The figure that reflects current return is the running yield, derived as dividend divided by price each year and shown in the year-by-year table, which drifts with your dividend-growth and price-growth inputs.

What are qualified versus non-qualified dividends? ›

Qualified dividends meet a holding rule of 61 days within a 121-day window per IRS Publication 550 and are taxed at the 0/15/20 percent long-term capital gains brackets. Non-qualified dividends, common from REITs and bond funds, are taxed at ordinary rates of 10 to 37 percent. This calculator lets you set the qualified share, which changes the tax the snowball pays each year and how much is reinvested.

Written by Chris Park · Updated 2026-07-22
Embed this calculator on your site ›

Drop the snippet into a post or page — everything runs client-side. The credit line is optional: removing it or adding nofollow is fine, and the embed stays free either way. Sizing, theming, and the full list ›

<iframe src="https://compoundcoast.com/accumulate/dividend-snowball/?embed=1" title="Dividend Snowball Calculator — compoundcoast" width="100%" height="1800" loading="lazy" style="border:1px solid #2a3350;border-radius:12px"></iframe>
<p>Calculator by <a href="https://compoundcoast.com/accumulate/dividend-snowball/" rel="nofollow">compoundcoast</a></p>

Related