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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 have access to a free Dividend Reinvestment Plan (DRIP) that will convert cash distributions into additional shares of the
securities that pay them. One stock or ETF can be enrolled, or an entire account. There is no charge to sign up, and even better, the
broker-dealer does not charge any commissions when additional shares are purchased
with dividends.
Firstrade DRIP Requirements
A stock or ETF must have a market price of $4.00 or higher to be eligible for Firstrade’s DRIP. The security must also be marginable. This means it
must be eligible to be borrowed. Not all securities are marginable. For example, recent IPO’s and Bulletin Board stocks aren’t marginable under U.S.
securities regulations. Firstrade can also set its own policies regarding what’s marginable and what’s not.
Some foreign stocks are eligible for Firstrade’s DRIP. In order to receive shares of the security instead of cash, the equity must be purchased and
the trade settled by the record date of the dividend.
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Firstrade DRIP Plan Details
Firstrade’s service will credit both whole shares and fractional shares. Reinvested shares are
purchased at market price on the payment date of the dividend.
In reality, there is no such thing as a fractional share in the U.S stock market. Firstrade takes all the dividends that its customers receive from
a given stocks, and uses that pile of money to purchase as many shares as possible. It then distributes those shares to its customers. The broker
will add a fraction to your account if it needs to, but that’s just an accounting service. At the next dividend, the broker will purchase a whole
share, or if you liquidate that fraction, Firstrade will exchange it for cash at the going market rate.
How to Reinvest Dividends on Firstrade
To sign up for Firstrade’s DRIP service, you simply need to go to ‘My Accounts’ on the broker’s website, and then choose ‘Positions.’ Here, there
will be a link that says ‘Dividend Reinvestment Plan.’ Specific securities can be enrolled
and disenrolled. Another option is simply to enroll an entire account. Firstrade requires that at least one security be in an account to choose this
option.
Firstrade Mutual Funds DRIP
Dividends and capital gains distributions for mutual funds can be reinvested or paid as cash. The broker’s mutual fund order form has a selection
where either option can be chosen. Technically, this is a different service than the DRIP.
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