Fidelity: How to Automatically Reinvest Dividends
Fidelity Investments is one of the largest and most respected financial services companies in the world. With a wide range of investment options, including stocks, bonds, mutual funds, and more, Fidelity provides individuals and institutions with the tools and resources they need to achieve their financial goals.
One popular feature offered by Fidelity is the ability to automatically reinvest dividends. Dividends are a portion of a company’s profits that are distributed to shareholders, typically in the form of cash or additional shares of stock. Reinvesting dividends allows investors to buy more shares of a company’s stock, potentially increasing their overall investment value over time.
Here is a step-by-step guide on how to set up automatic dividend reinvestment with Fidelity:
1. Open a Fidelity account: If you don’t already have a Fidelity account, you’ll need to open one. This can be done online or through a Fidelity branch office.
2. Choose your investment: Decide which stock or mutual fund you want to invest in and ensure that it offers dividend payments.
3. Set up automatic dividend reinvestment: Once you have selected your investment, log in to your Fidelity account and navigate to the “Account Features” or “Dividends” section. Look for an option to enroll in automatic dividend reinvestment and follow the instructions provided.
4. Select your reinvestment preferences: Fidelity allows you to choose whether you want your dividends reinvested in the same stock or mutual fund, or if you prefer to reinvest in a different investment option. Make your selection based on your investment strategy and goals.
5. Confirm your enrollment: After making your selections, review the information to ensure accuracy and confirm your enrollment in the automatic dividend reinvestment program.
Once you have set up automatic dividend reinvestment with Fidelity, you can sit back and let your investments grow. Fidelity will take care of reinvesting your dividends, saving you the time and effort of manually reinvesting them yourself.
FAQs about Fidelity’s Automatic Dividend Reinvestment:
1. How much does it cost to reinvest dividends with Fidelity?
– Fidelity does not charge any fees for automatic dividend reinvestment.
2. Can I choose which stocks or funds to reinvest my dividends in?
– Yes, you have the option to reinvest dividends in the same investment or choose a different one.
3. How often are dividends reinvested?
– Dividends are typically reinvested quarterly or on a schedule determined by the investment.
4. Can I stop or change my automatic dividend reinvestment at any time?
– Yes, you can modify or cancel your enrollment in the program at any time.
5. Are there any tax implications of automatic dividend reinvestment?
– Reinvested dividends are generally subject to taxes, just like regular dividends. Consult with a tax advisor for specific guidance.
6. Can I enroll in automatic dividend reinvestment for multiple investments?
– Yes, you can set up automatic dividend reinvestment for multiple stocks or funds in your Fidelity account.
7. Can I reinvest dividends in a different investment account?
– Dividends can only be reinvested within the same Fidelity account.
8. Can I reinvest dividends in a retirement account?
– Yes, you can set up automatic dividend reinvestment in Fidelity retirement accounts.
9. What happens if a dividend payment is too small to purchase a whole share?
– Fidelity will use the cash from the dividend payment to purchase fractional shares, ensuring that your dividend is fully reinvested.
10. Can I reinvest dividends in mutual funds that charge fees?
– Yes, you can reinvest dividends in mutual funds that have fees, but those fees may impact your overall return.
11. Can I receive cash dividends instead of reinvesting them?
– Yes, you have the option to receive cash dividends instead of reinvesting them.
12. Is automatic dividend reinvestment available for international stocks or funds?
– Yes, Fidelity offers automatic dividend reinvestment for both domestic and international investments.
By setting up automatic dividend reinvestment with Fidelity, investors can make the most of their dividends and potentially accelerate their investment growth. Whether you’re a beginner or an experienced investor, Fidelity provides a seamless and convenient way to reinvest your dividends and build your investment portfolio.