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Unleash the power of dividend reinvestment with HeyTrade

Jun 27, 2023 | Follow the Money

We explain what dividend reinvestment is, how to do, and the benefits it offers. 

What is dividend reinvestment? 

When you invest in a company that pays dividends, you have two options: to receive the payment in cash or to reinvest in the company by acquiring more shares. This second option is known as the dividend reinvestment. 

Can I reinvest dividends in HeyTrade? 

Yes, but only if the company allows it.  At HeyTrade we offer you the option to reinvest dividends, as long as the issuing company pays the optional dividend. At that time, you will receive an email in your inbox with an attachment. In this document you will be given the option of collecting the dividend in cash or in shares. Just follow the instructions.  

It is important to note that with HeyTrade you will not pay any commissions for this process but there is always a surcharge from the issuer on the final share price

What are the advantages of dividend reinvestment?

Dividend reinvestment provides three major advantages for investors:

  1. You avoid paying trading fees. If what you are going to do with the dividend is to reinvest it, you save the expenses associated with the re-purchase operation. 
  2. Tax deferral. When you receive cash dividends you must declare them as income in your income tax return and pay the corresponding taxes. However, by reinvesting dividends, you avoid having to pay taxes until you sell the shares in the future. 
  3. Compound interest. By reinvesting dividends, you increase the number of shares you own. As this number grows, subsequent dividends generate more income, which in turn increases your ability to reinvest and so on in a cycle.

If you like the idea of reinvesting dividends, HeyTrade also has the option to invest in accumulation ETFs. When the companies included in the ETF pay out dividends, they are automatically reinvested at no cost to you.

If you have any questions, please write to . We will be glad to help you.

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