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Firstrade DRIP: Dividend Reinvestment in 2024
Firstrade dividend reinvestment program fees. DRIP plan on stocks, ETFs, mutual funds. Does Firstrade offer DRIP service?
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Firstrade’s DRIP Service
Investors at Firstrade can take advantage of a free Dividend Reinvestment Plan (DRIP) that turns cash payouts into more shares of the securities that paid them. You can enroll individual stocks or ETFs, or even your entire account. There are no fees to join, and Firstrade does not charge commissions when purchasing additional shares with dividends.
Firstrade DRIP Requirements
To qualify for Firstrade’s DRIP, a stock or ETF must have a market price of $4.00 or more. The security also needs to be marginable, meaning it must be eligible to be borrowed against. However, not all securities qualify. For example, new IPOs and Bulletin Board stocks are not marginable under U.S. regulations. Firstrade may also have its own rules about which securities are marginable.
Some foreign stocks are also eligible for the DRIP. To receive shares instead of cash, the security must be purchased, and the trade must settle by the dividend’s record date.
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Firstrade DRIP Plan Details
Firstrade’s DRIP credits both whole and fractional shares. These shares are bought at the market price on the dividend’s payment date. If the dividend amount isn’t enough to buy a whole share, a fractional share will be credited to your account.
Firstrade’s system handles everything automatically. For example, if you own 800 shares of stock ABC, which pays a dividend of $0.25 per share, you would receive $200. If ABC is priced at $50, you would get 4 additional shares. If it’s priced at $40, you would receive 5 shares. If it’s trading at $38, you would get 5.263 shares.
While there are no fractional shares in the U.S. stock market, Firstrade pools dividends from all its customers to buy as many shares as possible. These shares are then divided among the customers. If needed, the broker credits fractions to your account for bookkeeping. When the next dividend arrives, or if you sell your holdings, Firstrade either buys a full share or converts the fraction into cash at the current market rate.
How to Reinvest Dividends on Firstrade
To enroll in Firstrade’s DRIP service, log into your account, go to ‘My Accounts,’ and select ‘Positions.’ You’ll find a link labeled ‘Dividend Reinvestment Plan.’ You can choose to enroll or disenroll specific securities, or you can opt to enroll your entire account. To enroll the whole account, there must be at least one security in it.
Firstrade Mutual Funds DRIP
For mutual funds, both dividends and capital gains distributions can either be reinvested or taken as cash. When placing a mutual fund order, you can select your preferred option. This service is technically different from the regular DRIP.
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Updated on 10/16/2024.
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