Dividend reinvestment
Every reinvested payout buys shares that pay their own dividends. Over decades this quiet loop does most of the work.
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Portfolio value with reinvestment
Without reinvestment (price growth only)—
Compounding advantage—
Total dividends reinvested—
Annual dividend income in final year—
Model: dividends received each year buy more of the same portfolio at that year's price; yield applies to the growing share count; taxes and transaction costs ignored for clarity. Real results vary.