ASX Dividend Reinvestment Calculator (DRIP)

Compare reinvesting dividends versus taking them as cash income from ASX shares and ETFs. Includes franking credit impact and long-term compounding projection.

Initial investment

The amount you invest upfront in dividend-paying ASX shares or ETFs.

Dividend yield

Annual dividend as a % of share price. VAS ~4%, VHY ~5–6%, individual ASX stocks vary widely.

Capital growth (price appreciation)

Expected annual share price growth, separate from dividends. ASX 200 long-run ~4–5% price growth.

Franking level

Most ASX blue-chips pay fully franked dividends. International ETFs (VGS, VDHG) are typically unfranked.

Dividend strategy

Dividends are reinvested to buy more shares — compounding accelerates over time.

Monthly contribution

Optional. Regular top-ups via your brokerage — e.g. a DCA strategy into VAS or A200.

Investment timeframe

How long you plan to hold the investment.

Annual model: dividends earned on opening balance, growth applied after. Franking credits shown at 30% company tax rate — the tax offset depends on your personal marginal rate. General guidance only — not financial advice.

Portfolio growth: reinvest vs take cash

20 years at 4% yield + 4% capital growth — hover to inspect

With DRIP (reinvested)Cash dividends (not reinvested)Contributions

Reinvesting dividends adds $24,699 to your final portfolio value. Both scenarios assume 4% annual capital growth. Does not account for tax on dividends or capital gains.

How dividend reinvestment works in Australia

What is a DRIP?

A Dividend Reinvestment Plan (DRIP) automatically uses your dividend payments to purchase additional shares instead of paying them as cash. Many ASX-listed companies offer DRIPs directly through their share registry (ComputerShare or Link Market Services). Platforms like Pearler also support automatic reinvestment for ETFs. Over time, the extra shares generate their own dividends — a compounding effect that substantially boosts long-term wealth.

Franked dividends and franking credits

Australia's dividend imputation system means companies pay dividends from after-tax profits. When a company has already paid 30% corporate tax on those profits, it attaches franking credits to the dividend. You include the grossed-up dividend (cash + credits) as income, then claim the credits as a tax offset. If your marginal rate is below 30%, the ATO refunds the excess — making fully franked ASX dividends especially valuable for lower-income investors and retirees.

Why reinvesting beats taking cash

When you take dividends as cash, your share count stays flat and only grows from capital appreciation. With DRIP, every payment goes straight back to work buying more shares. The difference compounds: a $10,000 investment in a stock returning 4% yield and 4% capital growth grows to roughly $46,000 after 20 years with full reinvestment — versus about $22,000 in portfolio value if you pocket every dividend. The compounding gap widens significantly over 30+ years.

How to set up DRIP on ASX

For direct shareholdings: log in to ComputerShare or Link Market Services and elect DRP (Dividend Reinvestment Plan) for each company. For ETFs: most Vanguard and BetaShares ETFs allow you to elect distributions as additional units rather than cash — check the fund's product page or your broker's settings. Platforms like Pearler automate this across your entire portfolio. Note: reinvested dividends are still assessable income in the year received, even though no cash hits your account.

Frequently asked questions

How much does reinvesting dividends actually matter long-term?: Significantly. A $10,000 investment at 4% yield and 4% capital growth, held for 20 years, grows to roughly $46,000 with full reinvestment versus around $22,000 in portfolio value (plus ~$12,000 received as cash dividends) without it. The compounding effect is even larger over 30–40 years, which is why long-term Australian investors consistently favour DRIP during the wealth-building phase.
What are franking credits and how do they benefit Australian investors?: Franking credits represent the 30% corporate tax already paid on dividends. You add them to your assessable income (grossing up the dividend) and then claim them as a dollar-for-dollar tax offset. If your marginal rate is 32.5%, you pay an extra 2.5 cents per $1 of grossed-up income. If your rate is below 30% — common in retirement — you receive a cash refund from the ATO for the excess credits. This makes fully franked ASX dividends worth considerably more than an equivalent unfranked yield.
Are reinvested dividends taxable in Australia?: Yes. Even though the cash never touches your account, the ATO treats reinvested dividends as assessable income in the income year they are received. You must declare them on your tax return. Each parcel of shares acquired via DRIP also has its own cost base equal to the market price at reinvestment — keep records or use Sharesight to track this automatically for CGT purposes.
Which ASX ETFs have the highest dividend yields?: High-yield ETFs on the ASX include VHY (Vanguard Australian High Yield, ~5–6%), HVST (BetaShares Australian Dividend Harvester, ~7%+), and SYI (SPDR MSCI Australia Select High Dividend Yield, ~5–6%). Broad market funds like VAS and A200 typically yield ~4%, while growth-oriented funds like VDHG and DHHF yield around 2–3%. Note that higher yields often accompany lower capital growth — total return matters more than yield alone.
Do Australian brokers support automatic dividend reinvestment?: Support varies. ComputerShare and Link Market Services (which manage registries for most ASX companies) offer direct DRPs you can elect online. Pearler supports automatic reinvestment across ETF positions. Stake supports DRIP for US stocks but not ASX. CommSec and SelfWealth generally require you to elect DRP directly through the registry. Check your broker's help centre or the company's investor relations page to confirm availability for each holding.
Does DRIP make sense if I need income in retirement?: Not always. DRIP is best suited to the wealth-building phase — when you don't need the cash flow and want maximum compounding. Once you're drawing down, taking dividends as cash provides reliable, regular income without needing to sell units. Many Australian retirees hold high-yield ASX stocks specifically for the income stream, supplemented by franking credit refunds if they're below the 30% tax rate. Use the toggle in this calculator to compare both strategies side by side.