About Dividend Reinvestments

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A dividend reinvestment is one of the options that a person gets when they own a stock. Find out how to reinvest dividends on a stock, in fractional shares or full shares, with help from a portfolio manager in this free video on personal finance and money management.

Part of the Video Series: Stocks & Bonds
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Video Transcript

All right, so we're going to talk about dividend reinvestment. Dividend reinvestment is actually one of the options you get when you have own you own a stock. Dividend reinvestment is, as you might expect, reinvesting dividends on a stock. It's one of the normal options given when you purchase a stock. One, you can have the dividends paid to you, or they can be reinvested. Reinvestment of dividends happens when dividends, after they've been declared and they're paid out on the dividend, ex-dividend date those dividends will buy back either fractional shares or full shares of stock. As an example, if your dividends came back and you made fifty dollars in dividends and you wanted those reinvested back into the stock that will happen automatically. If the share price was, for example, twenty three dollars, and you've made fifty dollars in dividends what will happen is you'll get two shares plus fractional shares for the leftover amount. So, anything that will not buy a full share will buy a fractional share if you do dividend reinvestment.

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