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Dividend investors using M1 Finance will be happy to hear that the platform is introducing some major changes and improvements specific to dividends. In this brief post, I’m going to explain and give you a sneak peak of what’s coming.
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One of the biggest requests from users has been the ability to reinvest dividends back into the stock they came from instead of having them reinvested broadly in the pie to underweight assets in the portfolio based on one’s target allocations. Users will now be able to reinvest dividends back into the same stock that paid them.
For example, Amazon dividends can buy more Amazon shares, Coca-Cola dividends can buy more Coca-Cola shares, and McDonald’s dividends can buy more McDonald’s shares:
It doesn’t stop there, though. You can also instead choose to have your dividends transferred to other accounts like a high-yield cash account, and you’ll be able to customize this at the individual security level.
So for example, you could choose to have Amazon dividends go to your cash balance like usual, co*ke dividends buy more co*ke shares, and McDonald’s dividends transfer to your high-yield cash account:
To access this from the main portfolio screen, scroll down on the left sidebar and look for Dividend handling:
Click that and we can control the setting for where cash dividends are directed:
Again, we can simply add cash to the account which is how they’re currently handled by default where they go to underweight securities in the portfolio based on target allocations.
The second option is to reinvest all dividends back into the securities that paid them, so again Amazon back into Amazon and co*ke back into co*ke.
Third is the option to have them directed to a high yield cash or savings account to be spent. We obviously lose this one if we’re talking about a retirement account like an IRA.
The 4th option is that we can granularly customize this on a per security basis, where I can choose how its dividends are handled.
M1 is also introducing a new, intuitive dividend tracker interface to track earnings more easily:
If we go to the Holdings tab, now we’ve got a whole new section for dividend income that breaks things down nicely. I can look at the previous year, the current year, and estimates for the next 12 months.
Scrolling down, it shows me upcoming dividends for each individual holding including the ex-dividend date, the pay date, number of shares, the dividend amount per share, what that payment equates to, and the status of confirmed or estimated.
Scrolling down further, for each holding we’ve also got metrics like dividend payments over the last 12 months, dividend yield, yield on cost, average cost, and dividend payout frequency.
It sounds like these new features will be rolling out to all users in the last week of June 2024 or the first week of July 2024.
You might be wondering what a well-diversified dividend portfolio would even look like. Obligatory reminder that I designed a dividend portfolio for income investors using M1 Finance that you can find here.
What do you think of these new dividend features for M1? Let me know in the comments.
Disclaimer: While I love diving into investing-related data and playing around with backtests, this is not financial advice, investing advice, or tax advice. The information on this website is for informational, educational, and entertainment purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a research report. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. I always attempt to ensure the accuracy of information presented but that accuracy cannot be guaranteed. Do your own due diligence. I mention M1 Finance a lot around here. M1 does not provide investment advice, and this is not an offer or solicitation of an offer, or advice to buy or sell any security, and you are encouraged to consult your personal investment, legal, and tax advisors. Hypothetical examples used, such as historical backtests, do not reflect any specific investments, are for illustrative purposes only, and should not be considered an offer to buy or sell any products. All investing involves risk, including the risk of losing the money you invest. Past performance does not guarantee future results. Opinions are my own and do not represent those of other parties mentioned. Read my lengthier disclaimer here.
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