This method adds distributed compounded dividends. These dividends are considered to be reinvested in more shares of the stock. Specifically, the return calculator computes that the cash amount received it is reinvested in more shares at the stock price of the following day.

If it is set a dividend tax rate different than 0%, this cost will be substracted for each dividend. Introducing a dividend tax rate of 15% means that just 85% of the pretax dividend will be reinvested.

When comparing this method to the "non-reinvested dividends" method", neither of both is always favorable for the investor. It may appear that reinvesting dividends is always better-off, but it is not the case when the stock price sharply goes down after the reinvestment.