Investing Simple Logo
Menu
Webull free stock promotion
Get 2 FREE Stocks Valued up to $3,300!
Account Opening: 1 Free Stock Worth $3 - $300, Account Funding: 1 Free Stock Worth $7 - $3,000 (offer ends 2/10/2022)
Written by Cari Scribner on January 10, 2022
Category: 
FTC Disclosure

What Happens With Dividends On Robinhood?

Dividends are one of the most rewarding parts about investing.

By providing a consistent income stream, it's even possible to generate enough cashflow to allow you to retire early with dividends.

By picking winning dividend stocks, you can benefit from the growth of the share price over time while being rewarded with regular payments in the form of dividends.

Or, you could take a more passive approach and invest in a high dividend yield index fund. This gives you built in diversification.

Robinhood is one of the most popular investing apps available today. You may be wondering how dividends are handled with Robinhood. Here's what happens when you earn dividends in your Robinhood account as well as where they end up going!

What Happens With Dividends On Robinhood?

If you own most dividend stocks, you will earn a dividend on a quarterly basis. Most funds pay out dividends at this frequency as well. However, some dividend stocks such as "O" pay them out every single month.

You have two options for what to do with dividends when they become available to you on the Robinhood platform:

  1. Take the cash payment
  2. Reinvest the dividend

There’s always the option to pull the money out of your account as cash. But ask yourself, is there a chance you will blow it all on Friday night dinner and drinks? Is it even enough to cover that?

The wiser option in many cases is to reinvest the money.

Robinhood has set up a functionality to reinvest your dividends automatically if you wish. By default, your dividends will just go to your cash balance within your Robinhood account. However, you may want to consider reinvesting to earn compound interest.

Dividends will be paid at the end of the trading day on the designated payment date.

Best Free Stock Promotions

BrokeragePromotionLink
Robinhood Logo1 Free Stock (Up To $225)Download
Webull Logo2 Free Stocks (Up To $1,850)Download
Firstrade trading platform2 Free Stocks (Up To $400)Download
M1 Finance Robo AdvisorGet $30 When You Deposit $1,000Download
Acorns LogoFree $10 BonusDownload
SoFi Robo Advisor1 Free Stock Up To $1,000Download

Robinhood's Dividend Reinvestment (DRIP)

If you use the dividend reinvestment feature, dividends earned will be reinvested back into the issuing stock. Robinhood will purchase fractional shares of the stock or ETF, so you don't need to worry about the share price.

On the app, all you have to do is turn on Dividend Reinvestment Plan or "DRIP" for short.

Here's how to enable dividend reinvestment on the Robinhood app:

  1. Go to the account tab by clicking on the person icon
  2. Click on investing 
  3. Scroll down until you see dividend reinvestment and click on it
  4. Toggle the switch to on to enable dividend reinvestment

Keep in mind, however, that Robinhood requires you to enable fractional shares to use DRIP.

Robinhood Free Training

We put together a free 30 minute video training that walks you through the entire process, step by step. This training will help you get up and running in no time at all.

GET THE GUIDE

What Stocks Are Eligible For Dividend Reinvestment?

Any stocks or ETFs eligible for fractional shares are also eligible for dividend reinvestment. 

Dividend payments will be split based on the fraction of shares owned, then rounded to the nearest penny.

Robinhood will reinvest your dividends on the trading day after the dividend pay date. You will get a notification letting you know when your dividends have been reinvested.

At this point, you'll own more fractional shares in that stock and will see a compounding effect on your returns if you continue reinvesting.

Conclusion

You basically have two options when it comes to earning dividends on Robinhood:

  1. You can take the cash and withdraw it or invest it on your own
  2. Or, you can use the dividend reinvestment plan, as long as you have fractional shares enabled

Robinhood’s dividend reinvestment plan is a sound way to put your dividends back to work for your portfolio.

Article written by Cari Scribner
Cari Scribner is a career journalist with 20 year’s experience writing for newspapers and magazines. Now a freelance writer, she is also a published fiction writer with more than 15 short stories in literary mags. She recently completed a novel that is on the desk for consideration at two publishing houses. She lives with her two small dogs, Miloh and Lucy, in Upstate NY.

Platform Reviews

Power Your Investing

Choosing the right product and service is essential for your investing. Here are some of the tools and services to help your portfolio grow.
Robinhood
Robinhood provides an easy-to-use free trading platform for beginner investors. Robinhood has $0 account minimums. Get a free stock when you open an account below.
Try Robinhood
M1 Finance
M1 Finance offers a free investing platform where users can build portfolios of stocks and ETFs. Users can also choose from a variety of pre-built portfolios offered for free.
Try M1 Finance
Fundrise
Passively invest in private real estate deals with as little as $10. Fundrise allows you to own residential and commercial real estate across the U.S. starting at a 1% annual fee.
Try Fundrise
Copyright © 2018 – 2022 Investing Simple LLC. All Rights Reserved.
Investing Simple is a financial publisher that does not offer any personal financial advice or advocate the purchase or sale of any security or investment for any specific individual. Members should be aware that investment markets have inherent risks, and past performance does not assure future results. Investing Simple has advertising relationships with some of the offers listed on this website. The information on Investing Simple could be different from what you find when visiting a third-party website. All products are presented without warranty. For more information, please read our full disclaimer.
Developed by Stallion Cognitive
magnifiermenuchevron-downcross-circlechevron-down-circle
linkedin facebook pinterest youtube rss twitter instagram facebook-blank rss-blank linkedin-blank pinterest youtube twitter instagram
Copy link
Powered by Social Snap