Thursday, August 15, 2019

Motif Investing Is Another Free Brokerage Option For Dividend Investors

Last year, I launched my premium newsletter titled Dividend Growth Investor Newsletter. In the newsletter, I build a portfolio of dividend growth stocks with the intention to generate $1,000 in monthly dividend income. I allocate $1,000 each month to ten attractively valued dividend growth stocks every single month using broker Robinhood. I used Robinhood, because the stock broker doesn’t charge commissions for buying individual stocks and it also offers real-time execution of orders.

The downside is that I can only purchase full shares, and not fractional shares. Therefore, if I wanted to buy one share of Johnson & Johnson and one share of Lockheed Martin, I cannot simply put $100 in each – I have to put the equivalent of $500 in both. Since I invest $1,000 each month in that portfolio, this causes some temporary lopsidedness in portfolio weights.

In addition, some readers have complained that Robinhood does not offer not automatic dividend reinvestment and that it doesn’t offer retirement accounts such as Roth IRA’s for example.

I rediscovered Motif Investing, a stock broker that I had reviewed a few years ago for its innovative idea to let you make an investment in up to 30 securities at once for a price of $9.95 for the whole trade. I never really did much investing using Motif, because I figured that I could invest in 30 companies directly and commission free using Robinhood. I could also invest in these 30 companies per month by using a broker such as Interactive Brokers, where I am charged 35 cents/trade. None of these options allow me to buy fractional shares however, though they do offer instantaneous order execution in real-time.

Basically, Motif lets you invest a certain dollar amount into companies in your choosing, completely commission free. The platform allows you to invest through a taxable or tax-deferred portfolio.
In order to do that, you need to open a brokerage account, and provide information about yourself. This is typical, so I will skip it. Just make sure you have your Social Security Number, address, driver’s license and bank information handy. Once you open the account, and add a bank account, you can make investments with it.

While Motif doesn’t allow to DRIP cash dividends into the stock that produced them, they offer an interesting feature called “Auto-Reinvest Dividends”. This feature allows you to reinvest dividends into shares of a single entity of your choice. Otherwise, these dividends will be deposited as cash to your account, and you can choose to reinvest them any way you want. In theory, you can reinvest amounts as low as $1 into stock. I believe that the lowest denominator of individual securities you can purchase is 0.01 shares.

To make an investment after you log on to the account, click on “Trading”, and then click on “ Trade Stocks”.

You are taken to a screen that asks for the stock ticker, whether you want to buy or sell. Under quantity, select “Amount ($)”, and put the dollar amounts you want to invest in the security of your choice. Next, make sure you select an order type of “Market”, and also make sure that the checkbox for “ Execute trade on next market open” is checked.

Click “preview order”, and you are in business once you hit “ place order”. The order will be executed at the open on the next day.

In a Motif account, all single stock trades ( outside of built or community motifs) are commission-free when you select the option to trade at the next market open. Auto-reinvest dividends, auto invest are also commission free.

There are some drawbacks to Motif Investing however. You should be aware that there is a co-called platform fee of $10/quarter, which is assessed on accounts which have a balance below $10,000 or which hasn't paid a stock commission over the preceding 3 months. There are a few other ways to avoid the penalty, such as being a paid Motif Blue member, which costs $19.95/month but gives you 3 commission-free real-time trades and five commission-free next market open trades for motifs built by you or another Motif community member. It also provides early notifications about new IPOs and real-time quotes on all pages. If you have their Impact Member portfolios, you would avoid the quarterly fee, but you will be charged a fee of 0.25%/year, and you will be limited to their robo-adviser like selection of investments. For that reason, make sure you have at least $10,000 to invest there, and you are committed to building out your portfolio through Motif. Robinhood on the other hand, doesn't have a fee on low account balances.

While Motif offers a lot of other options, such as buying already made portfolios, robo-advisor like portfolios, and many other options, I focused only on the direct stock investment feature at low commissions that could be directly applicable to myself. I believe that Motif is a good platform for serious investors who do not want to pay commissions on their investments, buy fractional shares, and be able to invest through a retirement account, and open and maintain an account balance of at least $10,000.

Have you used Motif Investing? If so, I would love to hear your experienced. Please email me at

Relevant Articles:

Create Your Own Dividend ETF With Motif Investing
Robinhood Offers Free Stock Trading for Dividend Investors
The Best Broker for Dividend Investors: Interactive Brokers
Stress Testing Your Dividend Portfolio

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