Compare the long-term impact of reinvesting dividends versus taking them as cash income.
Dividends Reinvested
£116,274
Total value
Dividends Withdrawn
£53,066
Portfolio + £26,453 cash
Reinvestment advantage: £36,755
This is the extra wealth generated by reinvesting dividends rather than spending them.
| Year | Reinvested | Withdrawn | Cash Taken |
|---|---|---|---|
| 1 | £21,840 | £21,000 | £800 |
| 2 | £23,849 | £22,050 | £1,640 |
| 3 | £26,043 | £23,153 | £2,522 |
| 4 | £28,439 | £24,310 | £3,448 |
| 5 | £31,056 | £25,526 | £4,421 |
| 10 | £48,223 | £32,578 | £10,062 |
| 15 | £74,881 | £41,579 | £17,263 |
| 18 | £97,507 | £48,132 | £22,506 |
| 19 | £106,478 | £50,539 | £24,431 |
| 20 | £116,274 | £53,066 | £26,453 |
Reinvesting dividends is one of the most powerful wealth-building strategies available to investors. When you reinvest dividends, you buy additional shares which then generate their own dividends, creating a snowball effect. Over decades, this compounding can transform modest investments into substantial wealth.
Research by Barclays has shown that \u00a3100 invested in UK equities in 1899 would have grown to around \u00a3200 in real terms by 2023 with dividends taken as cash. With dividends reinvested, the same \u00a3100 would have grown to over \u00a330,000. This dramatic difference illustrates why long-term investors should seriously consider reinvesting their dividends.
Building a savings habit is one of the most effective ways to improve your financial wellbeing. You may also find our Compound Interest Savings Calculator useful for related calculations.
For a broader view of your finances, try the Compound Interest Calculator or the Take-Home Pay Calculator. All of our calculators are free to use and updated for the 2026/27 tax year where applicable.
Compound Interest Savings Calculator
See how your savings grow over time with compound interest and regular monthly c...
Compound Interest Calculator
Calculate compound interest on any amount with flexible compounding frequencies.
Savings Goal Calculator
Work out how much you need to save each month to reach your savings target.
ISA Growth Calculator
Calculate the tax-free growth of your ISA savings over time.
Savings Comparison Calculator
Compare different savings accounts and interest rates side by side to find the b...
Savings vs Investing Calculator
Compare projected returns from savings accounts versus stock market investing ov...
We use cookies to ensure the website works properly and to help us understand how it is used. You can accept all cookies, reject non-essential ones, or manage your preferences. Read our Privacy Policy for full details.