Robinhood Dividends – How does Robinhood pay Dividends

Many individuals who were either stone-broke or dirt poor have become millionaires by simply trading stocks. It is a venture that has proven to be quite lucrative if you know what you are doing.

People who want to venture into stocks trading but don’t know how to go about it, often hire brokerage firms to trade stocks on their behalf. Of course, it’s always smart to hire a professional if you don’t know how to get something done, but this always comes at a cost.

Most brokerage companies charge brokerage fees and brokerage commissions, which is why many people avoid investing in broker-assisted trades.

To provide people with an easier and cheaper way to trade stocks, Vladimir Tenev and Baihy Bhatt developed a mobile app called Robinhood, which enables individuals to invest in stocks and exchange-traded funds without paying any commission. The app supports Apple Watch, iPhone and Android, and it is also available on the web.

Like any other reputable brokerage firm, Robinhood is approved by the Securities Investor Protection Corporation (SIPC) and the Financial Industry Regulatory Authority (FINRA) and regulated by the U.S. Securities and Exchange Commission.

Robinhood offer stocks and exchange-traded funds trading. However, they do not support mutual funds, tracking stocks, preferred stocks, OTC equities, foreign-domiciled securities, foreign exchange, and fixed income trading.

Users can also trade cryptocurrencies; however, the cryptos a user is able to trade via Robinhood Crypto depends on where they live. Currently, Robinhood Crypto is available in only 15 states.  

Although it is registered with FinCEN, Robinhood Crypto is not a member of FINRA nor is it a member of SIPC. It should also be noted that your stocks and options investments are protected by SIPC, but your cryptocurrency investments are not.

Does Robinhood Pay Dividends?

Yes, it does. Robinhood has partnered with a clearing firm known as Apex Clearing to help process dividends automatically. The dividends are then credited to the user’s cash account by default. They are not automatically reinvested because Robinhood doesn’t have a dividend reinvestment program as of yet.  

How does Robinhood pay Dividends?

Robinhood pays out dividends monthly and quarterly. When dividends get paid out, a notification message is sent to your phone alerting you about the payment. To see the paid dividend, go to “History” click on “Filter” and then select Dividends. From here, you can also see your pending and past paid dividends.

Dividend payouts and distribution on Robinhood follow a procedure, which is as follows:

  • Declaration date

This is the day the company’s Board of Directors declares to its shareholders that a dividend payment will be made, when it will be made and the amount that will be paid.

  • Ex-dividend date

This is the dividend payment cut-off date, so to speak, although dividends are not paid on this day. In other words, any investor who purchases stock or options on Robinhood on the ex-dividend date will not receive the next dividend payment. But any investor who invests before this date is entitled to receive the dividend.

This date is two days before the Holder-of-record date.

  • Holder-of-record date

This is the date Robinhood takes a look at its records to see if you are a stockholder and if you are entitled to receive the dividend.

  • Payment date:

This is the date when stockholders get paid their dividends. Payments are only made to stockholders who were recognized on the holder-of-record date.  

How to set up dividend reinvestment (DRIP) in Robinhood?

Robinhood reinvest dividends option is not available. Basically, you cannot set up a DRIP on Robinhood because it is not supported. However, there is a way you can manually reinvest your dividends on Robinhood.

What you need to do is manually reinvest your dividends back into a company. Each time you get a dividend from an ETF or stock in your portfolio, take the money and buy additional shares in the company. It’s not exactly the way DRIP works, but the concept is the same, except you are doing it in a slightly different way.

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