The Best Platforms for Dividend Investing: Dividend Stocks, Real Estate, and More

Whether you're looking to earn a little passive income on the side or you want to retire early, dividend investing can help you achieve your financial goals sooner than expected. Earning dividends on your investments allows you to enjoy an additional stream of income or grow your investments faster by reinvesting your dividends.

But what is the best platform for dividend investing? And should you invest in dividend stocks, real estate, or something else? Here's what you need to know to pick the best dividend investing platform for your needs.

When choosing the best platform for dividend investing, it's important to understand how dividend reinvestment works and the different ways in which various platforms reinvest or pay dividends. When you earn dividends on an investment, those dividends can be paid out to you in the form of a check, added to your cash balance so you can reinvest them yourself, or automatically reinvested through a dividend reinvestment plan (DRIP).

While you don't receive regular cash payments when you reinvest dividends, doing so helps your investments grow faster thanks to compound interest. Say the platform you're investing with earns you $20 a month in dividends. If you cash those dividends out each month, you'll earn $1,200 in dividend payments in five years. However, if you automatically reinvest those dividends at a 10% annual rate of return, you'll earn over $1,500 in dividends. If you're investing for retirement, this can add up to thousands of dollars in extra retirement funds.

Some platforms allow you to cash out your dividends each week, month, or quarter while others automatically reinvest them. If you're looking to earn passive income right now, you'll want a platform for dividend investing that lets you cash out your dividends now. However, if you're able to wait a while before you cash out, opting for a platform that reinvests your dividends can mean a much larger payout in the future.

TD Ameritrade

• Trade dividend stocks, ETFs, mutual funds, and more
• Optional automatic dividend reinvestment plan (DRIP)
• Commission-free trading

TD Ameritrade is a favorite when it comes to stock trading apps, and for good reason. The platform is easy to use, offers commission-free trading, and even includes an "income estimator" feature that uses historical data to estimate your dividend payout on stocks that have historically paid dividends. All of this combined makes TD Ameritrade one of the best platforms for dividend investing if you're interested in actively trading stocks.

You can enroll in their dividend reinvested plan (DRIP) for free, and the app will automatically use your dividend earnings to purchase additional shares or fractional shares in the stocks and ETFs, and mutual funds you own. More than 5,000 stocks on TD Ameritrade are eligible for this DRIP program, and all mutual funds are eligible for the automatic reinvestment of distributions. If you choose to have your dividends paid out, they will collect in your account and a check will be mailed to you at the end of the month once your dividends equate to $10 or more. You can also contact TD Ameritrade and ask for payment to be distributed if your dividends total less than $10.

M1

• Automatic investing according to your goals, time horizon, and risk tolerance
• No management fees or commission
• Option to automatically reinvest dividends once they reach $10

M1 Finance is a robo advisor that also acts as an all-in-one cash management, investment, and borrowing app. Their investing program is designed to be customizable yet automated, so you can set it once and then forget it. The app is one of the best platforms for dividend investing if you're just getting started because it allows you to pick from a list of over 80 different portfolios to model your investments after. You can choose a dividend-oriented portfolio without having to pick your own stocks and figure out asset allocation on your own. However, you can also invest in individual stocks and build your own portfolio from scratch, so it's great for more advanced dividend investors as well.

Dividends you earn appear in your cash balance. If you choose to turn on automatic reinvestments, your dividends will be automatically reinvested every time your cash balance hits $10. M1 doesn't charge any management fees for their basic membership and offers commission-free trading. You can upgrade to an M1 Plus account to unlock extra features like additional trading windows, smart transfers, custodial accounts, a lower borrowing rate, and a premium checking account for $125 per year, and the first year is free.

Fundrise

• Non-traded REIT
• Annual mangement fee of 1%
• Dividends are paid in cash at the end of each quarter with the option to automatically reinvest

Fundrise is a real estate investment platform that lets users buy shares in a private real estate investment trust (REIT) for as little as $10. The Fundrise eREIT is invested in a diversified portfolio of institutional-quality real estate with the goal of producing enough cash flow to generate dividends. As an eREIT, Fundrise is legally required to distribute at least 90% of its taxable income to investors annually as dividends, making it one of the best platforms for dividend investing.

That said, Fundrise and real estate in general is meant as a long-term investment, so you might not see dividends right away. After an initial "ramping up" phase, most real estate investments on Fundrise generate average annual returns between 7% and 12%. Their income eREIT, which is geared toward dividend investors, is offering a current dividend of 5.96%. This means if you have $10,000 invested, you'd be earning about $150 per quarter in dividend payments. You can take this as a cash payment, or you can automatically reinvest those dividends through their DRIP, which allows you to choose how your dividends are reinvested.

Mainvest

• Invest in small business loans
• No fees
• Earn interest each quarter through a revenue-sharing program

Mainvest lets investors lend money to local businesses—whether a food truck looking to go full brick-and-mortar or a brewery opening a second location—and earn "dividends" in the form of a revenue-sharing note. Essentially, you loan money to a business with a target rate of return on your investment, and that business shares its revenue with you until you meet your investment multiple. You might loan $100 with a target investment multiple of 1.5, and in that case, you'll earn a quarterly payout from that business's revenue until you've made $150.

The revenue-sharing note you invest in will include a due date for the repayment of your initial investment, and you should expect to keep your money in place for about 4 to 5 years. In other words, this isn't a short-term investment. Quarterly dividends aren't guaranteed, but if the business defaults and you don't receive your money by the time your revenue-sharing note matures, you'll receive the remaining amount as a balloon payment.

Fund That Flip

• No fees
• Invest in residential real estate redevelopment projects
• Earn monthly interest payments

With Fund That Flip, you can invest in real estate redevelopment—AKA house flipping projects. You loan money to Fund That Flip's pre-vetted real estate projects, and you can expect to be repaid in a relatively short time period; on average, your principal is repaid in under 10 months. Interest payments are made to investors monthly, and average annualized returns are at 10.75% for investments of $5,000 or more.

While there's no option to automatically reinvest your interest or "dividend" payments, you can let them accumulate and then add them to your next Fund That Flip investment. Investors don't pay any out-of-pocket fees, and the minimum to invest is $1,000.

Is dividend investing a good strategy?

Dividend investing can be a smart investing strategy if you're looking to generate an additional revenue stream or passive income you can partially live off of. It provides a cash flow source if you ever need additional funds or decide to retire early. Even if you reinvest your dividends rather than cash them out, this can help you build wealth faster. That said, dividend stocks don't always do a great job of outperforming growth stocks in the long-run, so it's important to include investments that offer more in the way of capital appreciation in your portfolio if you're a long-term investor.

How do I choose the best platform for dividend investing?

First, you'll need to choose what to invest in. For the most part, you'll be investing in either dividend stocks or real estate if you want to earn dividends, although other investments—such as lending—offer other forms of passive income like interest payments. The best platform for dividend investing will be one that matches your risk tolerance, charges minimal fees, offers consistent dividend payouts, and has a minimum investment requirement that's not too high for your budget.

What broker should I use for dividends?

TD Ameritrade, Charles Schwab, and M1 Finance are three of the best brokers to use for dividends. If you're investing for dividends, look for a broker that offers a wide range of dividend stocks, commission-free trading, and additional tools and features to help you estimate your dividend payments. You may also want to look into the broker's dividend reinvestment plan (DRIP) if you plan to reinvest your dividends.

Can you get rich off dividends?

While you can't get rich quick off dividends, if you have a high enough savings rate and a long investment horizon, you can end up rich thanks to dividends. The key is starting early and investing as much as you can afford to in high-quality dividend stocks as well as diversified options like ETFs and mutual funds.