i What this calculator does
Reinvesting dividends buys more shares, which pay more dividends, which buy more shares. Over long periods that compounding accounts for a large share of total equity returns, often more than price appreciation alone.
The South African complication is that dividends carry 20% withholding tax before you can reinvest them, unless the shares sit inside a tax-free savings account. This runs both, so the difference is visible rather than assumed.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
How to use the Dividend Reinvestment Calculator
Every field has a working default, so the calculator produces a result the moment the page loads. Replace the defaults with your own figures and the output updates when you press the button.
- 1. Starting Investment (R)
- 2. Dividend Yield (%)
- 3. Annual Dividend Growth (%)
- 4. Annual Price Growth (%)
- 5. Years
- 6. Account Type
The result panel reports:
- Value With Reinvestment After
- Value Without Dividends taken as cash
Alongside the headline figures, the calculator reports starting investment, dividends reinvested, withholding rate, yield on original cost. Those are the numbers that usually explain why the headline result came out where it did.
The breakdown below the result shows every step of the arithmetic, so you can check the figure rather than trust it. The formula panel names each input as it is used, which is useful if you want to reproduce the calculation in a spreadsheet.
Frequently asked questions
Do South African brokers offer automatic reinvestment?
Some do, and several platforms will reinvest into the same share or into a default fund. Where it is not automatic you can reinvest manually, though brokerage on small amounts makes frequent reinvestment less efficient than quarterly or annual batches.
How much of a long-run return comes from dividends?
A large share, and more the longer the period. Over multi-decade horizons reinvested dividends have historically accounted for a substantial part of total equity returns, which is the argument for reinvesting rather than spending them during accumulation.
Does the 20% withholding tax really matter that much?
Over twenty years, yes. Reinvesting eighty cents instead of a rand, every year, compounds into a meaningful gap. That is the strongest practical argument for using the tax-free allowance on income-producing assets first.
What is yield on cost?
The current dividend measured against what you originally paid. With dividend growth and reinvestment it rises over time, and after two decades it can be several times the yield a new buyer receives. It measures your position rather than the share.
Should I reinvest in retirement?
Usually not, because the point of the portfolio then is income. The switch from reinvesting to drawing is the transition from accumulation to withdrawal, and it is worth planning rather than drifting into.
Are fractional shares available?
On several South African platforms, yes, which makes reinvestment far more efficient. Without them a dividend that does not buy a whole share sits as cash until it accumulates.
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