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Vanguard DRIP: Dividend Reinvestment Program


Vanguard dividend reinvestment program fee, commission, fractional shares. Vanguard DRIP plan enrollment for stocks, mutual funds, ETFs, and ADRs. Is it free?



Vanguard DRIP Program


While not all brokerage houses offer a Dividend Reinvestment Plan, also known as a DRIP, Vanguard does and the broker doesn't charge a dime for the service. Vanguard's DRIP will convert cash dividends into additional shares of a security that pays a dividend. Eligible assets include stocks and ETF's. Mutual funds can also be enrolled in dividend and capital gain distribution reinvestments.

Brokerage accounts at Vanguard are automatically enrolled for DRIP service. If you want to un-enroll a particular security or your entire account, you can give the broker a call at 1-800-992-8327 and a company associate will adjust your account. You can also contact the firm through its secure messaging system or by snail mail.

Besides the DRIP service, there are several other options available for cash dividends. They can be automatically transferred to a brokerage account's settlement fund, which is a Vanguard money market mutual fund. A dividend can also be transferred to an external bank account or cut and mailed as a paper check. The same choices are available for capital gain distributions that are paid by a fund.

These options you can choose for yourself. Simply click on the holding in your Vanguard account, scroll down to the bottom of the security details page to the place where it says 'Holding options.' Here you can edit the reinvestment options.

Changes need to be made two business days or more prior to the payable date of a dividend; otherwise, the older option will be effective when the distribution is paid.


Eligibility


There are certain requirements that must be met in order for a security to be enrolled in the broker's DRIP service. A security must be held in street name, for example, before the security's record date. This simply means that Vanguard's name must be on the electronic record, and normally it is.


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Details of Vanguard's DRIP


Some securities Vanguard does not permit under its DRIP service. Foreign stocks, American Depository Receipts (ADR's), Unit Investment Trusts, and a minority of domestic stocks are not eligible.

Vanguard will not allow a stock's cash dividend to be reinvested as additional shares if it has an average daily trading volume that the broker deems excessively low. Some corporate events may cause the broker to implement the same policy. These include reorganizations and mergers.

Some types of dividends are ineligible for Vanguard's DRIP service. These include special dividends, optional dividends, and dividends paid on securities held in your name but outside of a Vanguard account.

Vanguard reserves the right to make a stock or ETF eligible or ineligible for its DRIP service at any time, with or without notice to its clients. So if you have any concerns or questions, be sure to give the broker a call.


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Keeping Track


Vanguard records all reinvestment transactions. These reports can be found on your monthly brokerage account or on-line in the account history section.


Updated on 10/30/2017.





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