Does the Robinhood App allow investors a chance to DRIP? If you’re looking for the Robinhood App to provide a dividend reinvestment plan, you’re out of luck. At the time of this post, Robinhood does not provide any way to do it. They also don’t allow partial shares, so if they are going to implement it in the near future, they’ll have to radically change their overall design for Robinhood. Hopefully they’re working towards adding it in the future but until then, what do we plan on doing with our dividends from our high quality dividend growth stocks?
What I’m going to start doing is manually reinvesting the dividends back into the company. Yep, a manual DRIP so to speak. Every time I get a dividend from a stock in my portfolio, I’ll take that money and apply it to an additional share(s) in the company. While not quite the definition of DRIP, it’s the closest thing we can do with the Robinhood App. And considering it’s free trades, it sort of acts the same.
There’s a few cons to this approach, let’s go ahead and discuss them.
- No Partial Shares – With the Robinhood App not allowing partial shares, we’re going to have to provide the transaction with extra equity in order to round it up to a full share. While this is true, I always keep a percentage of cash in my account and I can cover the single share with no problem. I know this might not be the case for everybody, so the cash dividend will have to sit in your account until you accumulate enough to do a transaction.
- Not Automatic – The beauty of a DRIP is that it’s automatic. That means you can go about your life and not worry about the money that your stocks pay out to you. For those hands off investors, this is a god send. That just means we’re going to have to do a little extra work. This comes with some added benefit though–if we believe a stock is way overvalued, we can put their dividends to use in a separate stock that we feel is undervalued. Again, this might not be for everybody, but its something to think about.
While not perfect, I believe this is a decent way to get started with doing a Robinhood DRIP. Let me know in the comments if there’s a better way!