What To Do With DEGIRO Dividend Payments

If you start investing in stocks, you might have some stocks or ETFs that pay you a dividend. In this article I want to discuss how these payments work at my favorite investment platform. So let’s talk about DEGIRO dividend payments!

What Is Dividend Again?

Companies make money. And companies that don’t make money, go out of business. So you could say that on average if you were to invest in the entire stock market, your investments should make some money.

What companies do with all this cash they generate is up to them. Some may want to keep all their cash flow in the business, to fund further growth. Others might not have a good use for their cash and can decide to pay it out to shareholders. This is called dividend.

This dividend can be paid out to shareholders on a monthly, quarterly, or annual basis. Most companies pay a quarterly dividend though.

If you hold individual stocks, of with I’m not a fan, you will receive the dividend when they pay it out. If you hold ETFs or index funds, it depends on the fund what they do with it.

Some funds might not pay out dividends at all. Instead, they use the dividends they receive from their investments to buy more shares, effectively increasing the value of your investment by exactly the dividend amount. Other funds might distribute the dividends. Usually, they do so on a quarterly basis.

I invest in two index tracking ETFs at DEGIRO, one of them accumulates dividends (IUSN) and the other one distributes them (VWRL).

DEGIRO Dividend Payments

Now you might wonder how dividend payments work when you invest through DEGIRO. Actually, things are very easy.

First, you add cash to your account. You can read how to invest using DEGIRO in this article.

With that cash, you buy individual stocks or ETFs, and then you hold them. I don’t trade shares, my intent is to buy them and hold them forever. Unless, of course, I find something better to do with this cash.

Let’s assume a fund that pays a quarterly dividend. At the end of the quarter, the fund might decide to pay out a dividend and announce this payment on the announcement date. Around this time, you might see something in your DEGIRO account under “Corporate Actions”. On this screen, you can see how much dividends you can expect to receive.

This announcement date is usually a week before the ex-date, the date on which the fund begins to trade without the dividend value. In most cases, about two weeks later the cash (or stock dividend) is received in your account.

When investing through DEGIRO, dividends are automatically put in your account. The dividend is paid out into your cash holdings. You can then use this cash to trade.

Differences In Dividend Payments Between Basic and Custody Accounts

There are two different types of accounts at DEGIRO. They are called “Basic” and “Custody”. In the Basic plan, your shares could be subject to security lending, something I might write about later. With the Custody account, there is no security lending.

With regards to fees you pay DEGIRO when receiving dividends, it’s quite simple. If you have a Basic account, there are no fees. The dividend you receive is yours.

With a Custody account, this is different. If you receive dividends using a DEGIRO Custody account, you will pay a fee. This fee is – as of the moment of writing – 1 EUR + 3% of the dividend amount received, with a maximum of 10% of the dividend received. Here you can find the actual costs on the DEGIRO website.

This means that your dividend returns will be lower using a DEGIRO Custody account compared to a Basic account.

How Can You Reinvest Dividends with DEGIRO?

You might wonder why you would need the cash dividends in your account. After all, if you’re still working to build up your capital, you need more shares, not some euros in an account.

So the question arises, can you automatically reinvest your DEGIRO dividend payments? Unfortunately, today the answer is no. You will always receive the cash in your account. You will have to purchase more shares manually with this cash.

I would be happy if DEGIRO implemented a dividend reinvestment feature in their platform. That would make my life, and that of all of us who invest in dividend distributing funds, a whole lot easier.

22 thoughts on “What To Do With DEGIRO Dividend Payments”

  1. If you have a custody accout and don’t want to pay for receiving dividends you could look for an ETF that reinvests the dividends itself. Have you by any chance looked into those kinds of ETF’s?

  2. I have a few dividend-paying stocks as well, mainly for the psychological effect of seeing money come into my account at fixed intervals. Up until now I always waited to reinvest that cash till I deposited more cash from my checking account. It’s indeed a bit unfortunate that there is no (semi-)automated way to reinvest in (partial) shares like banks can do.

  3. security lending is quite a headache. you either have no risk and pay 3% on your dividend (so a 4% yielding stock you’ll only get 1%)

    Or they lend your account out, up to 30% of it of which you have no control and is, I assume invested somewhere else at risk, and you get back bigger % of your dividend.
    Low risk = pretty much wiped out dividends. Any info on this appreciated.

    • The fee is 3% of the dividend received. Not 4%-3%…
      If you receive a 4% dividend, you’d have to pay 0,12%.

  4. I invested in a uk small cap etf and chose the accumulating one exactly for this reason. Has anyone noticed that all these journalists (except for this blog) write articles comparing platforms but fail to compare the ost of actually running the account (eg receiving divdends)

  5. By the way Vanguard finally launched VWRP, an accumulation version of VWRL, last year. It is listed in London, Stuttgart and Milan. I am a EUR based investor in the Nordics. Anyone have any views on if it makes any real difference going into the etf in either of these locations. Yes, liquidity may be different but are there any other implications, such as tax? Thanks!

    • Hi there, thanks for stopping by! I don’t know about the tax implications in your country so I cannot comment on that. But I would definitely try to trade on an exchange in my own currency, to prevent unnecessary currency exchange rates. For the returns it doesn’t matter which currency you buy an ETF in.

  6. So I have a question: assume I receive 1 euro dividend. With the custody account will I receive 0 cents, or 90 cents? As the maximum of the fee for dividend processing is 10% of the dividend? (I am almost certain I’ll only pay a 10 cents fee, but want to be sure). Thank You.

    • Yeah, for a Degiro custody account (as of Oct 2020) the dividend costs are the minimum of 2 options:
      1) €1 + 3% of dividend
      2) 10% of dividend

      So let’s say you receive €5 dividend, it results in:
      1) 1 + 0.03 * 5 = 1 + 0.15 = €1.15
      2) 10% * 5 = €0.50
      In this case €0.50 of costs are applied for the dividend pay-out.

      The higher the dividend, the more it will lean towards 1). The point at which the costs start to be calculated with €1+3% is around €14 of dividend pay out.

      Hope this helps!

  7. all these comparison websites or fake news articles just compare buying and selling costs.

    This where degiro really got me – on the fees for divis

    So 2 answers

    1) Move broker (also degiro has a very limited choice of ETFs I have discovered)
    2) Buy only accumulation ETFs

    • You are right in that it is important to look further than just buy/sell costs.
      I am not a fan of one or the other broker, it is a matter of getting all the fees/costs for all brokers you want to compare, so

      – buy/sell costs for ETF, (inter)national stock, etc,..
      – dividend fee
      – yearly account costs
      most of these are a % of value/assets and/or a fixed fee.
      – additionally, if a broker offers no-fee ETFs, etc

      Next step is to set up a few scenarios and calculate the total costs. There are quite a lot of factors and you can vary them a bit to see the effect per year / in the long term.
      The better option depends on your particular goals, capital, etc. At first glance, a dividend fee of 10% or €1+3% sounds quite hefty. But compared to other brokers, it may balance out, given no yearly costs, low costs for buying shares, etc.

      I work through multiple brokers, each with their own (dis)advantages. For some I take the hit with higher fees for dividend but end up better overall.

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  9. I moved to degiro recently, and so far I’m very happy with them.
    I don’t have strong feelings about dividend reinvestment; if they offered it, I’d probably take it, but they don’t, which gives me an opportunity to consider whether to reinvest in the dividend-payer, or put the money elsewhere. Never hurts to review your investments, and this forces you do do so.
    But if dividend reinvestment is such an issue for you, why not use a broker who will facilitate that?

    • Hello, i have a basic account and I read that the dividend commission is 7.5 euro. If I get 5 euro dividend each quarter how much do I pay to degiro?
      I mean, im losing money by getting dividends.