What You Need to Know About Acorns Dividends - No BS Investing
Posted 271 views May 27, 2022, 10:29 - Elisabeth in Investing

What You Need to Know About Acorns Dividends

Want to earn extra money as a new investor? Acorns dividends are a great place to start. 

When you invest money in Acorns, you receive capital gains (or profits from your investments). As a bonus, you can also receive dividend income from some companies that you invest stocks in. Let’s take a deep dive into Acorns dividends and what they mean for you.  

Hint: Don’t have an Acorns account yet? Sign-up for the micro-investing app here. Your spare change is invested, even while you sleep. 

Key Takeaways:

  • Acorns is a micro-investing app that gives you the opportunity to invest and earn both capital gains and dividends. 
  • Dividends are portions of a company’s profits that are paid to its shareholders periodically. 
  • Acorns dividends are automatically reinvested in your portfolio so it grows even more. 
  • Different exchange-traded funds (ETFs) pay out at different times so this impacts when Acorns dividends are paid out. 
  • Check your Acorns dividends under “Recent Activity” within the app. 

What is Acorns?  

Acorns is a micro-investing app. It also offers an online checking account and debit card. The premise of Acorns is that the app rounds up your purchases to the nearest dollar and invests the spare change. 

For example, say that you spend $3.75 on a cup of tea at your favorite cafe. Acorns takes that spare $0.25 and invests it in your portfolio. Consider boosting your round-ups up to 10x. When round-up totals reach $5, that money is invested. 

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To earn even more with Acorns, you can also set up automatic transfers from your bank account. For example, you could automatically deposit $100 per month into your Acorns account. 

Your money goes into an Acorns portfolio. This portfolio is created after you tell Acorns your financial situation and goals. With your answers, Acorns recommends a mix of ETFs that become your portfolio.

What is a dividend?  

Dividends are portions of a company’s profits that are paid to its shareholders periodically. These dividends are paid in cash or as more stock. Dividends must be approved by a company’s board of directors. 

So why are dividends important? Because if you add dividend stocks to your portfolio, you can expect regular income and earn profits without selling stocks. 

There are different types of dividends including:

  • Cash dividends. These dividends are normally paid quarterly in cash. 
  • Special dividends. Special dividends are typically a one-time cash payment. 
  • Stock dividends. Stock dividends mean that more shares or stocks are given to shareholders in place of cash. 

Cash dividends are the most common type. Say that you own 100 shares in a company. If that company pays $0.50 per share in cash dividends per quarter, you’ll receive $50 per quarter or $200 per year in dividends. 

Not all companies offer dividends. Normally, it’s companies that are strong and stable such as Apple or Verizon. They can afford to pay dividends.  

So why do some companies offer them? A small dividend payout can help investors feel better when a company isn’t performing well–they can still make money. Dividends can also balance out negative market returns. Dividends encourage investors to invest (think of it as an extra bonus or a thank you from a company for investing). 

Acorns helps you earn dividends through portfolios that include a mix of dividend-paying funds. A mix is safer because you’re not guaranteed that a company will pay dividends forever. Also, investing in both dividend and non-dividend companies helps to diversify your investments and lowers your risk!

Hint: Do your research on the stock of any dividend-paying companies. 

Acorns dividends are automatically reinvested

With Acorns, you do earn dividends. But unlike some investment accounts, you don’t cash these dividends out. Instead, they are automatically reinvested in your portfolio so it grows even more. 

In other words, you get an extra cut of a company’s earnings in the form of dividends. These earnings are then automatically invested in more stocks. It forces you to keep building up your investment balance.  

This strategy is essentially dollar-cost averaging. The money you receive from dividends is immediately used to purchase more stocks in the same company. You automatically buy more shares when the price of the stock is down and fewer when the price is up at regular intervals. 

By investing regularly in Acorns and letting time do its thing, you can earn even more money as dividends are reinvested in Acorns’ thousands of stocks and bonds. 

Related: Should You Invest Money in the Stock Market or Pay Off Debt?

Dividends are paid out at different intervals

Your Acorns money is invested in ETFs (Exchange Traded Funds). Different ETFs pay out at different times so this impacts when Acorns dividends are paid out in your account and reinvested. 

Some ETFs pay out quarterly while others pay out monthly. Here are a few examples of ETF payout schedules:

  • Large Company Stocks (VOO) – Quarterly 
  • Small Company Stocks (IJR) – Quarterly
  • iShares ESG Aware MSCI EM ETF (ESGE) – Semi-Annually 
  • Short Term USD Bonds (ISTB) – Monthly
  • US Aggregate Bonds (AGG) – Monthly

Look at the “Portfolio” section of your account to see what ETFs your portfolio includes. The more money you invest, the more dividends you earn at different payout schedules. 

Hint: Dividends count as taxable income so make sure to include your dividend amount from the previous tax year when you file. 

Find dividends under “Recent Activity”

Want to see your dividends in Acorns? Here’s how to check your investment dividends:

  • Log into your Acorns account.
  • Click on “Invest for your future.”
  • Scroll down to “Recent Activity” and click “View all.”
  • View total dividends in the top green box.
  • Scroll down to view when dividends were earned. 

Related: How to Automate Your Finances in 3 Steps

Acorns dividend success story

Acorns dividends won’t make you wealthy right now, but they do provide a good way to earn extra money that will grow over time. 

Michelle Morris began micro-investing with Acorns. She chose a Moderate ETF portfolio which is 60% stocks and 40% bonds. After three years, her account value grew to over $1,200. 

$234.80 of her account value includes reinvested dividends and appreciation of the shares. Not bad for spare change, right? 

Acorns helps you make investment progress without even thinking about it since everything is automatic.  

Invest in Acorns to earn regular dividends

Acorns dividends offer reliable income for new investors. This income is then used to automatically grow your portfolio even more. 

It’s easy to get started with Acorns and you can make automatic savings and investment progress just through your spare change. Sign up for the app here

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Elisabeth O. is an MBA graduate with a specialization in International Finance & Investments and over six years of financial writing experience. She is passionate about long-term investing to build wealth, avoids day trading and speculations, and loves a good Warren Buffet quote.