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6 min read 6 stepsMay 8, 2026Verified May 2026

How to Set Up Dividend Reinvestment (DRIP)

Plain steps to turn on automatic dividend reinvestment in Fidelity, Schwab, Vanguard, and other brokerages so your dividends buy more shares for free.

At a Glance

Decide Whether DRIP Fits Your Goals

~44s

Before turning anything on, sit down with a piece of paper and answer two questions. First, do you need the dividend cash to pay monthly bills? If yes, leave DRIP off and keep the cash flowing into your account. Second, is the stock or fund inside an IRA or Roth IRA, or in a regular taxable account? Reinvesting in an IRA has no extra tax paperwork. Reinvesting in a regular account creates many small purchases that you must track for taxes when you eventually sell. Most retirees in their 60s and 70s who do not need the cash use DRIP inside their IRA but take cash from their taxable accounts.

Quick Tip

If you are not sure which choice is best, ask a fee-only financial advisor. The website napfa.org lists advisors who charge a flat fee instead of a commission.

Log Into Your Brokerage on a Computer

~31s

Open a web browser on a desktop or laptop. Type the brokerage web address: fidelity.com, schwab.com, investor.vanguard.com, etrade.com, or merrilledge.com. Click Log In in the top right and type your username and password. Type any code the brokerage texts to your phone. Once you are inside the account, look for the page that lists every stock and fund you own. The page is usually labeled Holdings, Positions, or Portfolio.

Warning

DRIP settings are easier to find on the desktop website than on the phone app. The phone app sometimes does not show the option at all.

Find the Dividend Reinvestment Settings

~32s

On Fidelity, click Accounts & Trade, then Account Features, then Brokerage & Trading, then Dividends and Capital Gains. On Schwab, click Service, then Account Settings, then Dividend Reinvestment under Cash Features. On Vanguard, click My Accounts, then Account Maintenance, then Dividend Reinvestment. On E-Trade, click Accounts, then Service, then Reinvestment of Dividends. The screen that opens shows every position you own with a column for the current setting, usually Cash or Reinvest.

Quick Tip

If you cannot find the menu, type "dividend reinvestment" in the website's search box. The right page usually shows up at the top of the results.

Turn On Reinvestment for Each Stock or Fund

~39s

Look down the list of your holdings. Next to each stock symbol is a button or drop-down showing the current setting. Click the one for the stock you want to reinvest. A box pops up asking you to confirm the change to Reinvest. Click Yes or Submit. The setting changes right away. Repeat for every other stock or fund you want to reinvest. Some brokerages also have a button labeled "Update All" or "Apply to All Eligible" that turns DRIP on for every position in the account at once.

Warning

Some stocks and most foreign stocks do not support DRIP. The button for those will be grayed out. The dividends from those stocks will keep coming in as cash, which is fine.

Confirm the Change Is Saved

~38s

After clicking Submit, look for a green check mark, a confirmation message, or an updated column that now says Reinvest instead of Cash. Print the page or take a screenshot for your records. The change takes effect for the next dividend payment. If a dividend was scheduled to pay tomorrow, it may still come as cash because the brokerage already locked in the setting earlier. The dividend after that one will reinvest. If you do not see the change a week later, log back in and try again, or call the brokerage phone line.

Quick Tip

Set a reminder on your phone for three months from now to log in and check that the next dividend actually reinvested as expected.

Watch the New Shares Show Up

~41s

On the next dividend payment date, log in and click the Activity or History tab. Filter by Dividends. You should now see two lines for each dividend: one labeled "Cash Dividend" or "Dividend Received," and a second labeled "Reinvestment" or "Dividend Reinvest" with a small fractional share purchase. The dollar amounts should match. The fractional share, like 0.342 shares, is added to your existing position. Your share count for that company is now slightly larger. Over the years, watching these small purchases add up is one of the quiet pleasures of long-term investing.

Warning

Reinvested dividends in a regular taxable account still appear on your 1099-DIV and you owe tax on them, even though you never saw the cash. Inside an IRA there is no tax until you withdraw the money.

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DRIP stands for Dividend Reinvestment Plan. When you turn on DRIP for a stock or fund you own, every dividend the company pays goes back into buying more shares of that same company instead of landing as cash in your account. The buying happens on the same day the dividend is paid, at the price the share is trading that day, and at no commission. Over the years, the small extra shares add up. A retiree who reinvests dividends in a steady company like Procter & Gamble for 20 years can end up with 30% to 50% more shares than someone who took the same dividends as cash, even if neither one ever added new money.

The idea behind DRIP is compounding. Each round of new shares earns its own dividend the next quarter. Those new dividends buy still more shares, which earn still more dividends. Albert Einstein is often quoted as calling compounding "the eighth wonder of the world." Whether or not he actually said it, the math works. A 4% yield reinvested for 20 years roughly doubles your share count, even before any rise in the share price.

DRIP is not the right choice for everyone. If you live on dividend income to pay rent, groceries, or medicine, taking the cash makes more sense than reinvesting. DRIP also creates small fractional shares like 0.234 shares, which can make tax records and selling a little messier. And reinvested dividends are still taxable in regular accounts, which means you may owe tax on money you never actually saw as cash. Inside an IRA or Roth IRA, this is not an issue because the account does not pay tax on dividends until you take money out.

Turning on DRIP is free at every major American brokerage. Fidelity, Schwab, Vanguard, E-Trade, and Merrill Edge all have a screen where you can turn it on for one stock at a time or for every stock in the account at once. The screen is buried a few clicks deep, but the steps below walk through it. You can turn DRIP on or off any time. If you change your mind a year later and want cash again, the change takes effect the next dividend cycle.

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