When people quote an ETF’s “return,” they often mean price change only — the share price went up or down. That understates what a buy-and-hold investor who reinvested dividends actually earned. Dividend reinvestment, often called DRIP, turns cash distributions into more shares so compounding includes income as well as price.
What DRIP does on each ex-dividend day
With DRIP enabled, the model assumes cash dividends buy additional shares on each ex-dividend day at that day’s closing price. Stock splits adjust share count when they occur. Nothing relies on a pre-baked “adjusted close” series; splits and dividends are applied to share count at runtime.
- DRIP on → total return path (price + reinvested dividends).
- DRIP off → price return only (dividends ignored as cash left on the sidelines).
- Same $10,000 start makes two ETFs easy to compare on one chart.
Why DRIP matters more for some ETFs
High-dividend and bond funds distribute more cash along the way. Over long periods, ignoring those distributions can make two funds look closer (or farther apart) than a reinvested investor experienced. Growth-heavy funds that pay little may show a smaller DRIP gap — but the clean habit is still to compare total return when you care about wealth, not just price.
Try the calculator below with DRIP on, then toggle it off on the results page to see the gap for the same dates.
What this is not
Historical DRIP charts are illustrations. They do not include taxes, account fees, bid–ask spreads, or your personal contribution schedule. They are not investment advice.