eToro dividends - how to invest in dividends with eToro

If you’re looking for a relatively low-risk way to invest and grow your money, dividend investing could be it. But how does it work on eToro?

Let’s start from the basics.

What is etoro?

eToro is a multi-asset trading platform, where you can invest in stocks and crypto assets, as well as trading CFDs. The platform specialises in the rather complex and high-risk world of cryptocurrency trading, as well as having a unique ‘social trading’ model. However, you can also use eToro to earn steady returns with dividend investments, which can be much more straightforward.

In this guide, we’ll give you the lowdown on eToro dividends, including how to receive them and anything else you need to know.

We’ll also cover how to withdraw from eToro (which operates in USD¹) without having to convert your money each time. Open a multi-currency account with Wise and you can use US bank details with eToro and reduce the currency conversion cost.

But more on that later. First, let’s cover the basics on dividend investing, and why it could be a good investment strategy for you.

How do dividends work?

When a publicly traded company makes profits, it has the choice of a few different ways to spend the money. It can reinvest in developing the company, hold onto the money, or reward its shareholders with dividend payments.

When you buy stock in a company which pays out dividend income, you’ll earn money on a regular basis without having to sell your shares. You’ll receive a dividend payment on a monthly, quarterly or annual basis, without having to do a thing.

The amount you receive depends on the dividend yield or amount set by the company, and how much stock you own. So, for example, if the annual dividend yield is 5% and you have 1 share in the company valued at £100, you’ll receive a £5 dividend payment that year.

Dividend investment is considered to be a fairly low-risk and steady way to grow your money. It’s certainly not as thrilling as other kinds of trading or investment, but it can pay off over time.

If you have stock in many different companies across your investment portfolio, each paying out regular dividend payments, you could be earning a decent income.

How to receive eToro dividends

Receiving eToro dividends is pretty straightforward, as your account is debited automatically. You’ll just need to make sure you’ve purchased the stock ahead of the ex-dividend date. This is when the stock begins trading without the value of its next dividend payment².

If you sell your shares before this crucial date, you’ll miss out on the dividend payment.

Here’s what you need to know about receiving dividends on eToros, on different kinds of stock.

eToro stock, ETF or indices dividends³

Provided you hold a ‘buy’ position on eToro when trading a dividend-paying stock, ETF or index, you’ll receive the payment automatically.

If your position is set to ‘sell’, the payment will be deducted from your balance instead.

eToro CFD dividends³

Like some other trading platforms, eToro also offers the opportunity to earn dividend payments on CFDs.

If you hold a CFD position by the ex-dividend date, you’ll automatically receive a dividend payment. This will be reflected in your balance by the time the ex-dividend date rolls around.

For positions secured with the real asset, you need to make sure you hold the position at least two business days before the ex-dividend date to qualify for a dividend payment. Then, you’ll receive the dividend credited to your available balance on the payment date.

Ready to withdraw your dividend earnings from eToro? Save money with Wise

Before you get started, a really important thing to note about using eToro from the UK. The platform operates in USD only, which means currency conversion fees when withdrawing to your account in GBP.

You can get round this by Opening a multi-currency account with Wise to withdraw in USD so that you won't have to reconvert your money before withdrawing. You can do this just like a US local, thanks to the US account details you get when you open your Wise account. Simply use these for withdrawals to reduce the conversion costs.

When the money hits your Wise account, you can withdraw, hang onto it for future or spend it using a Wise Multi-currency account.

Start saving today with Wise

Summary
So, there you have it - a handy, at-a-glance guide to eToro dividends and how they work. Plus, a money-saving tip for withdrawing your earnings in other currencies using Wise.

The best of luck with your dividend investments on eToro - just remember that trading often comes with risk, so make sure you’re comfortable with it before diving in headfirst.

Sources used for this article:

Sources checked on 31-March-2021.