Overview

With dividend reinvestments at Wealthsimple, you can automatically reinvest your cash dividends into additional shares or fractional shares of the underlying stock once you receive the dividend. 

Why use dividend reinvestments?

Long term, the biggest advantage of dividend reinvestments is the effect of automatic reinvestment on the compounding of returns. Investing your dividends into more shares of the same company increases the number of dividends you receive (since you now own more shares that pay out that dividend). This then lets you buy even more shares, which over time increases the total return potential of the investment.

Additionally, other benefits include:

• It allows you to automatically accumulate more shares without paying any commission
• It allows you to buy fractional shares, so every dividend dollar is being put back into the market
• It allows you to participate in dollar cost averaging (DCA), which over time can enhance returns and reduce market volatility

How it works with Wealthsimple

After turning on dividend reinvestments, we automatically reinvest any dividends earned on your fractional eligible securities in your opted-in account back into the same security. This generally happens right after the dividend lands in your account if the dividend is received during market hours, but may occur within 1-2 business days, when the applicable market is open.

You can read more on how fractional orders are processed here to understand the timeline and price at which your dividends are reinvested.

Since Wealthsimple offers fractional orders, we’re able to invest every dividend you receive back into the underlying security through fractional shares. This helps make sure that all of your extra cash is being reinvested as soon as possible.

Instances where dividends will not automatically be reinvested

Dividends may not get reinvested automatically if:

• There is insufficient cash in your account (e.g. if you use the dividend cash payment before it is reinvested)
• Order quantity is less than 0.0001 shares
• No shares are owned for the account, or the security is currently pending limit sell
• Security is not eligible for fractional trading
• Security is not eligible for trading (e.g. delisted)
• During a USD account upgrade
  • If a CAD dividend lands in a USD account
  • If a USD dividend lands in a CAD account
• The account is archived or suspended
• Technical issues prevent us from processing the reinvestment

Activate or deactivate dividend reinvestments

To activate or deactivate automatic dividend reinvestments for your entire account, follow the steps below. Keep in mind that you must own shares of the stock or ETF at the time of receiving dividends for the dividends to be reinvested. 

1. Log in to your Wealthsimple mobile app
2. Tap the Home tab at the bottom of your screen
3. Select the self-directed investing account where you want to activate dividend reinvestments
4. Tap the Settings (gear) icon in the top right corner
5. Select Dividend reinvestments
6. Toggle ON/OFF dividend reinvestments

View your dividend reinvestments activity

To view your dividend reinvestments activity, follow these steps:

1. Log in to your Wealthsimple mobile app
2. Tap the Activity tab  at the bottom of your screen
3. Tap the dividend you want to view
4. Here, you will see the amount earned and reinvested

Tax implications

Dividend payments are considered income and are taxed accordingly depending on the account type where you hold the dividend-paying stocks.