> ## Content Index > Fetch the complete content index at: https://www.simeff.com/llms.txt > Use this file to discover other available public pages before exploring further. # Reinvesting dividends from ETF investments - URL: https://www.simeff.com/reinvesting-dividends-from-etts/ - Published: 2024-10-28T01:54:42.000Z - Updated: 2024-10-28T03:06:18.000Z - Description: Teaching Kids the basics of financial literacy and investing. We learn about dividends and what we can do with dividends. - Author: Shaf Azam - Tags: Investing, #toc 💡 This is part of [Project Instill](https://www.simeff.com/the-project/), where I teach my kids (12 and 10) financial literacy and business basics. ## What did I want to do? - I wanted to explain to my kids Ash (12 years old) and Adh (10 years old) what was a dividend, and what we can do with dividends. - As part of this exercise, I also wanted to give them the opportunity to make decisions with dividends. - We have already gone through [why we need to invest](https://www.simeff.com/why-invest/) and [why ETF is an investment option to be considered](https://www.simeff.com/etfs/), and [purchasing ETFs on CommSec](https://www.simeff.com/investing-etfs/). ## What is dividend? We get dividend from an ETF if the ETF has a stock pool of companies that pay dividends. ETF issuers *collect any dividends paid by the companies whose stocks are held in the fund*, and they then pay those dividends to their shareholders - in this example us. Let's break this down: - Dividend is distribution of the profits by a company to it's shareholders. - Remember, ETF is a fund that has invested (i.e. purchased shares) in a collection of companies. - When any of the companies pay any dividend, the ETF issuer will receive the dividend because the ETF is a shareholder of the company. - After receiving the dividend, the ETF issuer will then pay the dividends to the shareholders of the ETF - in this case us, as we have invested (i.e. purchased shares) in the ETF. - Since we own ETF shares, we are shareholders of the ETF. ## Our first dividend On 15-Oct-2024, I got my first dividend for IVV (ISHARES S&P 500 ETF) ![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/Dividend-from-IVV-SnP-500.png) The dividend was paid to my CommBank CDIA account. I started thinking - what should I do with the dividend? - Should I take out the money and use it? - Should I reinvest a portion of the dividend back into IVV in this case? - Should I reinvest the whole dividend back into the portfolio? I was not keen on taking the money and spending it. I wanted to re-invest into the same IVV (ISHARES S&P 500 ETF). One way of reinvesting would be - to use this money and buy more IVV ETF Shares. But this would mean that I would need to: - Manually move the money to the investing account, and - Placing an order for this value. In order to save on brokerage fee, I could add this money along with my monthly investment capital. But this would mean that I manually calculate and add this. I wanted to understand if I could automate dividends being reinvested. ## Dividend Reinvestment Plan I called CommSec, and they advised me to contact the Share Registry and ask for a **Dividend Reinvestment Plan** \- this was the key word. In my example, the Share Registry company in Australia for IVV (ISHARES S&P 500 ETF) is [Computershare.com/au](https://www.computershare.com/au?ref=simeff.com). When I called Computershare, they asked the below three questions to verify us: - SRN/HIN - Company I have shares with - in this case, IVV (ISHARES S&P 500 ETF). - My name (in my case, my company and trust name) The person checked and said IVV offers reinvestment plans. - This is when I realised that not all shares offer this reinvestment plan! The person said I can also do it online on their [Computershare investor website](https://www-au.computershare.com/Investor/?ref=simeff.com#Home). ## Setting up a Dividend Reinvestment Plan with Share Register In this example, I am explaining the steps of setting up the Dividend Reinvestment Plan in Computershare Investor website: - Log in - Go to **My Profile** ![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/ComputerShare-My-Profile.png) - Click **Reinvestment Plans** ![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/ComputerShare-Reinvestment-Plans.png) - Select **Holding** ![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/ComputerShare-Reinvesment-Select-Holding.jpg) In this case, I am selecting ISHARES S&P ETF IVV EXCHANGE TRADED FUND. ![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/ComputerShare-Reinvesment-Select-Holding-APPLY.jpg) ***Note:*** DRP = Dividend Reinvestment Plan - Select the **Participation Level**: - I selected **Full Participation**, because, whatever dividend I get, I want it to be reinvested in full. - Click **AGREE AND CONTINUE**. ![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/ComputerShare-Reinvesment-Select-Holding-Participate-Agree.jpg) - Review the details and click **CONFIRM** ![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/ComputerShare-Reinvesment-Review-and-Confirm.jpg) - The next page will be a Confirmation screen displaying the reference number ![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/ComputerShare-Reinvesment-Confirmation.jpg) - I also received an email as below ![](https://storage.ghost.io/c/07/b0/07b05c56-0c23-436f-8f33-5c7d1cc1ecde/content/images/2024/10/ComputerShare-Reinvesment-Confirmation-Email-1.jpg) That's it! --- ## Next Step Let's look at: - How do we bookkeep dividends?