Are Dividends The Only Way To Make Money On Robinhood?

Robinhood is the first platform that offered “no brokerage” accounts. Yes, that means, Robinhood never charged any money or brokerage charges to any customer ( ream me ๐Ÿ™‚ ). So, for the last 5 years, I have been buying stocks on Robinhood without paying any brokerages ever. Now, the question is “are dividends the only way to make money on Robinhood”?

No, it is not. You can buy stocks lower and sell them when the price goes up. That will be capital gain. You can sell or buy options on Robinhood and make money. You can day trade too, but I believe your portfolio value has to be more than $25,000. And of course, when companies pay out dividends, for holding the respective stock, you get the dividend too.

Now let me give you some examples. A few months back, BTI or British Tobacco was around $36. I looked at the company, looked at the dividend yield and purchased some shares. Because I thought the company was undervalued. In a few months, the stock price went up around $48 a share. I sold my holding around $45. This is an example of short term capital gain. Of course, this is the primary way to make money on Robinhood.

While I was holding the stocks, BTI declared dividend and I earned that dividend. BTI has a high dividend yield. Beware, high dividend yield is not a reason to buy a stock. Read my article to find out what high dividend yield says about the stock. This is another way to make money from Robinhood. I have another post explaining how you get dividends on Robinhood.

Robinhood allows you to make with options trading and day trading too. But please understand these are pure speculations. And there will be a high risk. If you do not understand how trading works, then my suggestion will be not to try these. Remember what Buffet says, “Rule number 1 is not to lose money and rule number 2 is not to forget rule number 1.” Personally, I do not trade at all.