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Dividend investing is just one of the many ways to trade, invest and grow your money on Trading 212. The London-based company is one of the UK’s most popular forex trading apps, with an estimated 600,000 daily users¹. Between them, these users are carrying out around 1.5 million stock trades per day¹.
If you’re interested in dividend investing with Trading 212, read on. We’ve put together some helpful info you need to know about Trading 212 dividends, including how to receive them and how to reinvest them.
We’ve also got a hot tip for funding and withdrawing from your Trading 212 account, without getting stung on currency conversion fees. Open a multi-currency account with Wise and if you have trading profits in other currencies, you can use local account details from Wise to withdraw without any need for a currency conversion.
But more on that later. As Trading 212 is aimed at beginner traders, it could be useful to start with the basics of how dividends work.
Dividend investing is relatively simple and straightforward, especially compared to some of the far more complex investment instruments and products.
It involves buying the stock of companies which pay steady dividends. These are publicly traded companies with a choice of how to spend their profits - they can save the funds, direct them into research or development, or pay out dividend payments to shareholders.
Companies that offer dividend payments to investors will usually offer an annual dividend yield - for example, 5%. This means that if you hold a share of stock that’s currently valued at £100, you’ll get £5 a year in dividend income. However, dividends can also be paid monthly, quarterly or semi-annually.
This doesn’t sound like very much, but if you have a whole portfolio of dividend investments, it can yield a pretty attractive income. Dividends may not be the most thrilling way of investing (although if you’re risk averse, that’s probably a good thing), but they can deliver an easy, steady way to grow your money.
Plus, you can also choose to reinvest your dividend income. We’ll look at how to do this with Trading 212 in just a moment.
So, you’ve invested in stocks which pay dividends at Trading 212. How do you receive your payments? Here are the essentials you need to know.
All you need to do to receive dividends through Trading 212 Invest and ISA is to buy your shares at the right time. Provided you have the shares before what is known as the ex-dividend date, and don’t sell them before this important date, you should qualify for the dividend payment.
Trading 212 dividends are processed automatically, so they’ll be paid directly to your account without you needing to lift a finger.
Waiting on fractional share dividend payments? These will be divided according to the fraction of the shares you own, then rounded to the nearest £0.01.
Qualifying for Trading 212 CFD dividends is pretty much the same deal as with Invest and ISA dividends. You must have an open position of the company’s instrument before the ex-dividend date. Importantly though, you’ll need to make the trade on the day before the ex-dividend date.
Another important thing to remember with CFD dividends is that they can either be paid to, or taken from, your account. Depending whether the direction of your position is short or long on the ex-dividend date, you can make or lose money.
Again, dividend payments and deductions will happen automatically, and be made directly to/from your account.
You can simply cash out your Trading 212 dividends, but many app users choose to reinvest them instead. You can do this easily, simply by switching the ‘Auto-reinvest’ option on the ‘Dividends’ section of the app. This is enabled by default, but you can turn it off if you want.
When you receive dividend payments, they will only be automatically reinvested in certain circumstances. For example, if the amount of money in your ‘pie’ (a collection of stocks and ETFs) hits a certain minimum investment threshold. Otherwise, the cash remains in your account.
When you create a ‘pie’ with Trading 212, you’ll set a number of targets. When ‘Auto-reinvest’ is switched on, your dividends will be allocated and reinvested according to these targets.
Open a Wise multi-currency account and you’ll have a handy way to top up your Trading 212 account whenever you need to. But more importantly, you’ll potentially be able to save money when withdrawing your trading profits.
Trading 212 doesn’t charge fees for withdrawals, but it does have some currency conversion fees. If you’ll be withdrawing profits in a currency other than GBP, you can use your Wise account to avoid the need for conversion altogether.
Here’s how it works - when you sign up for a Wise account only, you also get access to local account details (account no and sort code) for the UK, US, Australia, EU and many others. You can simply choose the details in the currency you need, and hand these over to Trading 212 for deposits and withdrawals.
So, there you go - your at-a-glance guide to Trading 212 dividends, including what they are, how to receive them and how to reinvest dividends if that’s part of your investment strategy. Best of luck, and just remember that most stock trading comes with some degree of risk.
Sources used for this article:
Sources checked on 29-March-2021.
This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication. The information in this publication does not constitute legal, tax or other professional advice from Wise Payments Limited or its affiliates. Prior results do not guarantee a similar outcome. We make no representations, warranties or guarantees, whether express or implied, that the content in the publication is accurate, complete or up to date.
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