Charles Schwab DRIP Plans
Charles Schwab traders can have stock and mutual fund dividends reinvested into the securities themselves, instead of receiving cash payments. A helpful page on the broker’s DRIP service is available on the website. It can be located by typing in “dividend reinvestment” in the search field that appears in the upper-right of the site. The page can also be found by selecting “Products” in the top menu, and then choosing “Stocks”. A page entitled “Dividend Reinvestment” will then appear in the left-hand column.
This area describes the broker’s dividend reinvestment plan, or DRIP. The broker does offer the service for ETF’s too. And of course,
distributions from mutual funds can be rolled back into the fund as shares, instead of deposited into the account’s core position as cash.
Schwab does not charge anything for enrollment in its DRIP service. More than 4,000 stocks can be added to a dividend reinvestment plan. DRIP actions are always recorded on your monthly statement, so you’ll know anytime a reinvestment is made.
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Setting up DRIP Service on New Securities at Charles Schwab
It’s simple to establish automatic dividend reinvestment service at Schwab. If you haven’t yet purchased a stock or mutual fund, you can enroll a security on the order entry page. There will be an unchecked box next to “Reinvest Dividends”. Just check the box before you send the order, and the security will be automatically enrolled before it even appears in your account. The same process holds true for mutual fund orders. Just be sure to check the correct box before submitting the fund order.
Establishing a Charles Schwab DRIP on Current Holdings
If you already own stocks and mutual funds, you can check to see if they are set up to have distributions credited as shares. Under the “Accounts” tab, there is a “Positions” link that will take you to a list of all assets you hold with the broker. A column in the list will read “Reinvest?”. Each security will display a Yes or No answer. If a security isn’t yet enrolled, just click on the link to enroll it. If a stock is already enrolled, you can unenroll it by clicking on the yes answer.
Mutual funds will have two answers, one for dividends and one for capital gains. You can have one of these deposited as cash, while the other is reinvested in the fund. Or you can set up both to be deposited as cash or both reinvested.
Comparison
Many brokers offer dividend reinvestment plans. Like Schwab, they usually don’t charge for the service.
For online brokerage firms that offer better dividend reinvestment plans take a look at Broker DRIP plans article.
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Charles Schwab does not charge fees or commissions to use its automatic dividend reinvestment plans.
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The Cost of Trading
Trading stocks and non-commission-free ETF’s is $4.95 at Schwab. This is low by industry standards, with Ally Invest
matching this rate and offering $3.95 discounted commission for clients making 30 or more trades in three month. Schwab also has representatives over the phone who can assist customers in placing a trade.
Using a human broker to execute a trade adds an additional $25 to the trade cost, for a total of $29.95.
Schwab offers its clients more than 200 ETF’s that are free to trade. This list is one of the largest sources of commission-free ETF's among on-line brokers. It's a great opportunity for novices to practice trading without paying a commission.
Beyond stocks and ETF's, investors at Schwab can buy and sell other securities, such as bonds, CD's, and mutual funds. As with other products, there is educational material on these products that can help beginners to make better trading decisions.
The broker does have a $1,000 minimum initial deposit requirement to open a trading account. However, this requirement can be waved by opening a Schwab checking account during the application process. Schwab bank and brokerage accounts, along with optionsXpress accounts, can all be accessed with one log-in.
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Website and Trading Tools
Schwab has some user-friendly trading tools that beginners will find helpful. A web-based order form makes buying and selling securities easy. The website is straightforward and simple to learn. Also available is trading by automated phone system, which tacks on an extra $5 to the cost of the trade. New traders will find no difficulty with the basic trading tools Schwab offers.
For traders who want something more than the regular website, there is StreetSmart.com. It is a Java-based trading platform launched from within Schwab.com. It has many useful features, such as charting, account positions, and a chat system to reach out to customer service.
Schwab’s most advanced platform is StreetSmartEdge, available in the cloud or as a desktop program. Despite the application's sophistication, it's easy to navigate. Live streaming of CNBC is available at no cost. StreetSmartEdge is not intended to be a professional platform. Schwab designed it to be user-friendly, and it is. The platform also has a demo log-in where traders can view the platform and practice trading. The firm does require a $1,000 account balance to use StreetSmartEdge.
Traders can also buy and sell on iPhone, iPad, Apple Watch, Android, Kindle Fire, and mobile web. The platform is easy to learn. Users can make a mobile check deposit, transfer funds, place trades, and contact customer service. The app is ideal for busy and novice investors alike.
All the broker's trading platforms show account balances and positions. Vital information, such as amount available for withdrawal, profit or loss, today's change, and cost basis are shown. The information is displayed in an easy-to-understand format.
Charles Schwab DRIP Program Disclaimer
For the most recent information on Charles Schwab dividend reinvestment program (DRIP) visit their website.
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