The Dividend Reinvestment Program (DRIP) at Interactive Brokers is a service that allows investors to automatically reinvest cash dividends from eligible stocks back into additional shares of the same stock. This program is available for both U.S. and non-U.S. investors, making it particularly beneficial for international investors looking to take advantage of compounding returns.
Key features of IBKR's DRIP:
- Eligibility: DRIP is available for eligible stocks and ETFs that pay cash dividends. These include common and preferred stocks listed on US and Canadian exchanges.
- Reinvestment timing: Dividends are reinvested to purchase additional shares on the business day following the dividend payment.
- Share purchase: By default, stocks are purchased in whole share increments. If you have enabled fractional share permissions, fractional shares can be purchased.
- Market price: Unlike some issuers' treasury-offered DRIPs, IBKR's DRIP model involves purchasing shares on the open market at the current market price, not at Net Asset Value (NAV).
- Automatic reinvestment: DRIP works even if you no longer hold the original shares, as long as you owned them on the dividend record date.
How to enroll in DRIP:
- Log in to Client Portal
- Click on the User menu (head and shoulders icon in the top right corner) followed by Settings
- Under Account Settings section find the Trading section
- Select Dividend Election
- Check Reinvest or Receive Cash for Stock Defaults under Account Level Settings
- Click on Continue and complete the steps presented.
Please Note
- You can check a specific stock's DRIP eligibility when making your dividend election in the Client Portal.
- Ensure you have sufficient funds to avoid margin deficiency when dividends are reinvested.
DRIP transactions are recorded in the Trade section of your Activity Statement with a Code of R.