I have been buying stocks for the past year and robinhood has an option for them to reinvest your dividends for you and some people use this option and some people don’t. This is also called DRIP or the dividend reinvestment option. With this option on, you can automatically reinvest your cash dividends payments back into the underlying stocks or EFT with Drip. I do like the idea of a system reinvesting for you and it makes it super passive and you can set it up and forgot it if you want to. If you are playing the long game, this would be a great option for you if you have some great companies you wanted more shares of and your shares grow over time. I don’t use the Drip or the dividend reinvestment program and here’s why.
Do you let robinhood reinvest your dividends?
I don’t use robinhood to reinvestments my dividends cause I want more control of my stocks that I pick to buy. I pick the stocks that I want to buy and sometimes I like to take my dividends and buy into a different stocks. I have a list of stocks that I have not brought yet and sometimes I wait to see if the price will come down. With my dividends and the price drop, I can grab a few shares of a new company at a lower price. Also with the dividend reinvestment program, the dividend will go into the stock that paid you a dividend but once it goes into the stock, it goes as a fractional share which I don’t buy fractional shares unless it’s in a ETF, I like the whole share. So the program does not fit me at all and I like more control of my stocks that I own but there is nothing wrong with the program at all.
And if you don’t know what to invest in or don’t know what to do with your dividends than yes I would use that feature. There is nothing wrong with it and it will reinvest for you without you doing anything and if you don’t have the time to buy stocks with your dividends than I would use this option too. Everyone stock portfolio is different and I use this option in a Roth account cause I don’t have the time to buy stocks in that account but in robninhood, I have the time and I have a list of stocks that I want to buy and stocks that I want to buy more of and with my big list, I can catch one of those stocks at a cheaper price and with some dividends, I can get them even cheaper.
If you want something passive and you want something that you can set it and forgot, then using robinhood dividend reinvestment program or DRIP is something that I would use but if you want more control of your stocks you want control where your dividends go, then do use this option but in a roth IRA I would. If you would like to check out robinhood for your broker so you can buy stocks you can click here: If you want to build passive income on the side so you can buy more stocks, I have a program you can check out that you teach you how to build passive income from home and you can click here to check it out: Click here
Please be sure that you do your own research before doing anything in the stock market, before using the DRIP or dividend reinvestment program or buying any stocks or ETF. I am not a stock expert and here the post from robinhood explaining the dividend reinvestment program: The source: https://robinhood.com/us/en/support/articles/dividend-reinvestment/
