Dividend snowballs and DRIP: How reinvesting dividends can build your portfolio

Dividends can be a great way of supplementing your existing income, but how about using them to build your portfolio faster? Dividend growth investing is one of the strategies that a lot of investors opt for, allowing them to take advantage of a compounding effect—most often described as the dividend snowball.
In general, stocks (usually ASX) and managed funds will offer to deposit your dividends directly into your bank account or brokerage platform cash balance. Alternatively, some will offer a DRIP option.
What is DRIP?
DRIP stands for Dividend Reinvestment Plan. It's a program offered by many companies and brokerages that allows investors to automatically reinvest their dividends into additional shares of the stock, often without any transaction fees—although keep in mind that you’ll still need to pay tax on those dividends.
This makes the process of reinvesting dividends seamless and efficient, allowing you to take full advantage of the compounding effect without lifting a finger.
What is a dividend snowball?
When you invest in dividend-paying stocks, you receive periodic payments from the company. Instead of cashing out these dividends, you reinvest them to purchase additional shares. Over time, the number of shares you own—and consequently, the dividends you receive—increases, creating a compounding effect that can significantly boost your portfolio's value.
Investors generally describe this as a ‘dividend snowball’. It starts small but gathers more snow (dividends) as it descends, growing larger and larger. Of course, the difference is that it’ll ascend. Here’s a handy way of visualising this exponential growth when starting with $10,000:

- 5 years: The investment grows to approximately $16,105.
- 10 years: The investment increases to around $25,937.
- 15 years: The original investment has more than quadrupled at $41,772.
- 20 years: The investment grows to approximately $67,275.
- 25 years: The investment reaches around $108,367.
- 30 years: The investment skyrockets to about $174,494.
The magic behind the dividend snowball is the power of compounding. When you reinvest your dividends, you're essentially earning "interest on interest," or in this case, "dividends on dividends." This can have a dramatic impact on your portfolio's growth over the long term.
For example, if you initially invest $10,000 in a dividend-paying stock with an annual yield of 4%, reinvesting those dividends could nearly double your investment in 20 years - assuming the stock's price and dividend yield remain constant. When also adding in regular contributions, the amount of growth becomes even steeper.
Benefits of a dividend reinvestment plan
- Automated growth: With DRIP, the reinvestment is automatic, making it easier for you to stick to your investment strategy.
- No or low fees: Many DRIPs offer the option to purchase additional shares without brokerage fees, making it a cost-effective strategy.
- Dollar-cost averaging: Since you're buying shares at different price points, you benefit from dollar-cost averaging, which can reduce the impact of market volatility on your portfolio.
- Flexibility: You can start small and let the snowball effect work over time, making it an accessible strategy for investors of all levels.
Things to keep in mind
- Overexposure: Reinvesting dividends in the same stock can lead to overexposure to that particular asset. Diversification can be a helpful way of mitigating this by investing in a broad range of stocks, an ETF, or a managed fund.
- Tax Implications: Dividends are often subject to taxation, even if they're reinvested. Recording your dividends can be a helpful way of simplifying tax-time
- Market Risks: Like any investment, dividend-paying stocks are subject to market risks. Make sure to research before committing your money.
For more information on investing, check out some of our share trading guides. If you’re looking to get started in share trading, then check out our share trading page or have a look at some of the providers in the table below.
Share account comparisons on Mozo - rates updated daily
Share Trading
Small trade brokerage
Monthly fee
$8.80$0.00Invest in AU stocks, US stocks, HK stocks and ETFs on moomoo trading platform. Enjoy $0 brokerage fees for AU&US stock for 180 days as a new user. With US trades from $1.99 USD, other fees apply. Backed by a Nasdaq-listed fintech. (T&Cs apply).
Share Trading
Invest in AU stocks, US stocks, HK stocks and ETFs on moomoo trading platform. Enjoy $0 brokerage fees for AU&US stock for 180 days as a new user. With US trades from $1.99 USD, other fees apply. Backed by a Nasdaq-listed fintech. (T&Cs apply).
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- Brokerage-free trading on AU and US stocks for 180 days and ongoing free access to real-time US market data.
- Brokerage details
- ASX trades are 0.088% the transaction amount, minimum $8.80 per order. US trades from $1.99 USD, other fees apply.
- Settle from any bank account
- Settlement account offered
- -
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- For US trades additional fees apply: settlement fee $0.003 per share up to 5%, ADR custody fee $0.01-$0.05 per share. For sell trades: SEC fee min $0.01 per transaction and activity fee min $0.01 per transaction. These fees are shown in USD.
Read our Mozo Review to learn more about the Share Trading
Tiger Account
Small trade brokerage
Monthly fee
$5.50$0.00Tiger Brokers is an online broker listed on NASDAQ. It offers access to US, ASX & HK stocks, ETFs and US options trading. Enjoy one brokerage-free trade per month on US and ASX stocks* with account opening. Mozo special offer for new users only: Get USD $25 in Tesla fractional shares plus USD $50 in fractional shares for new accounts with an accumulative net deposit of AUD 500*. T&Cs apply.
Tiger Account
Tiger Brokers is an online broker listed on NASDAQ. It offers access to US, ASX & HK stocks, ETFs and US options trading. Enjoy one brokerage-free trade per month on US and ASX stocks* with account opening. Mozo special offer for new users only: Get USD $25 in Tesla fractional shares plus USD $50 in fractional shares for new accounts with an accumulative net deposit of AUD 500*. T&Cs apply.
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- One brokerage-free trade per month for 12 months. Receive 5 fractional shares with a deposit of AUD 500 and have a total account asset value of AUD 500 after 90 days. Referral offer: an additional USD 25 of fractional Tesla shares. T&Cs apply.
- Brokerage details
- 0.055% of trade value, $5.50 minimum brokerage.
- Settle from any bank account
- Settlement account offered
- no
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- -
Read our Mozo Review to learn more about the Tiger Account
Share Trading
Small trade brokerage
Monthly fee
$7.70$0.00Buy and sell with a low $7.70 flat fee per trade and access to all ASX Shares and ETFs to invest in with GO Markets. Enjoy dedicated local customer support, a regulated Australian company for trading ASX Shares and ETFs. Plus, enjoy $0 Brokerage on your next 15 trades! (T&Cs apply).
Share Trading
Buy and sell with a low $7.70 flat fee per trade and access to all ASX Shares and ETFs to invest in with GO Markets. Enjoy dedicated local customer support, a regulated Australian company for trading ASX Shares and ETFs. Plus, enjoy $0 Brokerage on your next 15 trades! (T&Cs apply).
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- Enjoy $0 Brokerage on your next 15 trades when you open a new account! (T&Cs apply).
- Brokerage details
- $7.70 brokerage for trades under $100,000, then 0.05%.
- Settle from any bank account
- Settlement account offered
- Macquarie Cash Management Account
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- -
Read our Mozo Review to learn more about the Share Trading
Idle Cash
Small trade brokerage
Monthly fee
$5.50$0.00Receive interest on your uninvested cash. Deposit over USD/AUD 5,000 to start receiving 1.5% return; 2.25% return on over AUD 50,000; Up to 3.25% return on over USD 50,000. Mozo special offer for new users only: Get USD 50 fractional shares plus USD 25 Tesla shares with a cumulative net deposit of min. AUD 500 within 7 days of the first account opening. T&Cs apply.
Idle Cash
Receive interest on your uninvested cash. Deposit over USD/AUD 5,000 to start receiving 1.5% return; 2.25% return on over AUD 50,000; Up to 3.25% return on over USD 50,000. Mozo special offer for new users only: Get USD 50 fractional shares plus USD 25 Tesla shares with a cumulative net deposit of min. AUD 500 within 7 days of the first account opening. T&Cs apply.
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- One brokerage-free trade per month for 12 months. Receive 5 fractional shares with a deposit of AUD 500 and have a total account asset value of AUD 500 after 90 days. Referral offer: an additional USD 25 of fractional Tesla shares. T&Cs apply.
- Brokerage details
- 0.055% of trade value, $5.50 minimum brokerage.
- Settle from any bank account
- Settlement account offered
- no
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- -
Read our Mozo Review to learn more about the Idle Cash
Webull Share Trading Platform
Small trade brokerage
Monthly fee
$4.90$0.00Webull lets you connect with international markets, trading ASX and US stocks and options. You’ll gain access to user-friendly platforms and technology-driven educational resources plus 2% yield on idle cash with Webull cash management.
Webull Share Trading Platform
Webull lets you connect with international markets, trading ASX and US stocks and options. You’ll gain access to user-friendly platforms and technology-driven educational resources plus 2% yield on idle cash with Webull cash management.
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- New accounts with a deposit of AUD $100 with at least one buy transaction receive 3 US and 2 ASX Security Trading Vouchers for purchases, valued at AUD $100 total. Up to AUD $5,000 of free fractional Apple shares depending on amount funded. T&Cs Apply.
- Brokerage details
- $4.90 up to $16333.33, then 0.03% on ASX trades. 0.025% commission on US trades.
- Settle from any bank account
- Settlement account offered
- Webull Cash Management
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- dynamic
- Market depth data
- Real time charting
- Other restrictions
- 0.50% foreign exchange transfer fee applies for international trading.
Read our Mozo Review to learn more about the Webull Share Trading Platform
ASX Shares
Small trade brokerage
Monthly fee
$0.00$0.00Join the world’s leading social trading platform, trusted by 30 million users worldwide. Invest in stocks, crypto, ETFs and more - all in one place. Hone your financial skills with a $100K virtual demo account.
ASX Shares
Join the world’s leading social trading platform, trusted by 30 million users worldwide. Invest in stocks, crypto, ETFs and more - all in one place. Hone your financial skills with a $100K virtual demo account.
- Monthly fee
- $0.00
- Monthly fee waiver
- n/a
- Special offers
- -
- Brokerage details
- There are no brokerage charges but a 0.50% fee is applied to all funds paid into or taken out of the USD settlement account
- Settle from any bank account
- Settlement account offered
- Customer funds are held in a Trust Account managed by JP Morgan Chase and Co
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- $5 USD withdrawal fee applies and a $10 monthly inactivity fee is charged after 12 months with no login activity.
Read our Mozo Review to learn more about the ASX Shares
Share Trading Account
Small trade brokerage
Monthly fee
$5.00$0.00$0 brokerage when you purchase ETFs ($5 to sell Aussie ETFs), plus traders can get started with a minimum investment of just $100. For new customers, get US $10 of Tesla when you sign up, use the exclusive referral code from Mozo (mozo23), and fund AUD $100 in 30 days (T&Cs apply).
Share Trading Account
$0 brokerage when you purchase ETFs ($5 to sell Aussie ETFs), plus traders can get started with a minimum investment of just $100. For new customers, get US $10 of Tesla when you sign up, use the exclusive referral code from Mozo (mozo23), and fund AUD $100 in 30 days (T&Cs apply).
- Monthly fee
- $0.00
- Monthly fee waiver
- -
- Special offers
- -
- Brokerage details
- Shares held in a consolidated HIN under Superheros name, ownership remains with share purchaser.
- Settle from any bank account
- Settlement account offered
- Superhero Wallet is a cash management account built into Superhero Account (held under NAB)
- CHESS ownership available
- Share pack
- Independent broker reports
- International markets
- Options
- Warrants
- IPOs
- Live data
- Market depth data
- Real time charting
- Other restrictions
- -
Read our Mozo Review to learn more about the Share Trading Account
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