Best online brokers for dividend reinvestment

Dividend stocks can be a great choice for investors looking for the predictable income from regular dividend payments. Companies that pay dividends tend to be well-established, so dividend stocks may are included on our list of low-risk investments. Investors can also choose to reinvest dividends if they don't need the stream of income.

How to invest in dividend stocks?

There are two main ways to invest in dividend stocks: Through mutual funds — such as index-funds or exchange-traded funds — that hold dividend stocks, or by purchasing individual dividend stocks. All you need to do is purchase your desired share of the stock before the ex-dividend date, then you can sell the shares on the ex-dividend date or any time afterwards. The ex-dividend date is the day the stock price often drops in accordance to the dividend amount. This will allow you to re-invest the dividends and buy more stock at any time.

Over the years, some companies tend to pay an increasing dividend annually. Stocks such as these are referred to as "Dividend Aristocrats", and the continuation of these payments becomes of paramount importance to retain and attract investors. Some of the top high-dividend stocks are Unilever, Johnson $Johson, Coca-Cola, Pepsico, Procter & Gamble, MacDonald's, Walmart Inc, Target Corp, AT&T, Sanofi, Universal Corp, Chevron Corp, and more.

Best Online Brokers for Dividend Reinvestment

eToro

eToro is a multi-asset platform which offers both investing in stocks and cryptoassets, as well as trading CFDs. They are well known for its social features that allow users to imitate the trades made by other popular traders. It's a top choice for US stocks thanks to its $0 brokerage fees, low currency conversion rate and trading features. With eToro you can earn dividends on a wide range of financial instruments including stocks, ETFs and even CFDs. The company is an exception in the broker world as most other brokers don’t offer dividends on CFDs. With the use of Leverage and Dividend Calendars, you can earn profits from dividends of eToro.

Robinhood

Robinhood charges zero commission for US stock, options, and crypto trading and there is no withdrawal or inactivity fee. Its mobile and web trading platforms are user-friendly and well designed. Robinhood does not yet offer automatic dividend reinvestment. However, since there are no commissions to trade, you can self-reinvest any time you receive a dividend. We recommend Robinhood for beginners and buy-and-hold investors focusing on the US stock market.

Charles Schwab

At Charles Schwab, you can trade a lot of different asset classes, from stocks to futures. Unfortunately, Charles Schwab covers only North American markets. The company offers dividend reinvestment to its customers. You can select which stocks you want to enable dividend reinvestment on the platform.

Final Thoughts

Dividend investing can be a good strategy to grow your investment portfolio over long periods of time, by collecting stocks that pay high dividends or have fast growing dividends.