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There are many different brokerage accounts available to investors, and the popularity varies based on which features you’re looking for.

As income investors, we’re going to be most concerned with fees, asset options, ease of use, customer service. Here are some of the well-known brokerage accounts:

When it comes to income investing, several brokerage accounts offer features and investment options that cater to income-focused investors.

This post will outline the different pros and cons of the most popular brokerage accounts so you can make the right choice for yourself.

Criteria That Investors Want

In 2023 Investor Business Daily conducted a survey to uncover what investors consider to be the most important features and services for their brokerage company.

The first part of the study uncovered that the 6 highest attributes combined account for 51% of the importance to investors. The next 6 combined account for 26%. This chart outlines the results of the study.

If you’re not sure what you’re looking for in a brokerage, this might be a good starting point to help you determine that. However, our list of attributes is different and we’ll cover this later on.

The second part of the study used these attributes as metrics for investors to evaluate their primary broker. The most evaluated and highest metrics went to the following brokerage accounts.

1. Charles Schwab
2. Fidelity Investments
3. TD Ameritrade
4. E-Trade Financial
5. Vanguard
6. Robinhood
7. Interactive Brokers

Because of customer demand and online brokers being so competitive, there aren’t any differences among the top brokerage accounts for some of the attributes.

However, we’re going to cover a few aspects before we get into what we find important and how we’ve ranked the different brokerages.

Trade Execution/Speed/Price

Price

Since Robinhood introduced zero trade fees, it forced other brokerages to drop theirs to be competitive. This has been seriously awesome.

Pretty much all brokerages charge zero fees for trading stocks and ETFs, but some still charge for options, future, assisted trades and even mutual funds. None of this affects things we trade, so it doesn’t matter.

Most brokerages are in business to make money so they had to offset that trade cost elsewhere. One of the ways is to use a payment for order flow (PFOF) model. This is essentially an affiliate commission from market makers to a brokerage for routing orders to them.

Robinhood uses PFOF. There was a big stink when this came to light because of their lack of disclosure. It remains a controversial practice, but the potential advantages of PFOF can allow for better execution prices and greater market liquidity. Of the list above, Charles Schwab, TD Ameritrade and E-Trade also use PFOF.

Speed

Speed and real-time price data is only really important to day traders. For the rest of us, speed becomes a personal input that’s not dictated by the brokerage.

The time it takes to execute a trade depends on whether you’re using a limit or market order. It can also depend on the trade volume of a stock. The higher the volume the faster a trade executes.

Market orders by nature are fast because they prioritize speed over price. Limit orders on the other hand are price sensitive and won’t execute until the right order is matched. As a value investor, buy-in price is very important which is why you shouldn’t use market orders.

Website Security

I don’t think that any of the top brokerages would be top brokerages if they didn’t have high website security.

This is something you can also increase yourself by using a strong password, 2FA, and a VPN when accessing your account especially if you’re on public Wi-Fi.

Equity Trading Platform

Trading execution setups and platforms are similar among brokerages. If you’ve used one, you can usually figure the others out.

That being said, if you’re new to using any type of exchange, there’s a learning curve. Many brokerages default to using market orders and it may not be as intuitive to change this unless you know you need to. Robinhood is a good example of a trading setup that you have to click a dropdown to find the limit order option.

If you don’t know what a limit order is, you need to learn about different types of orders and how to input the information correctly to get what you want before you start trading. You’ll probably lose money otherwise.

Customer Service

We’ve used all of the top 7 brokerage accounts listed above except Fidelity and Interactive Brokers plus several others and have never had a reason to contact customer service.

It’s obvious based on the survey results that this is a major area of concern for people. Again we don’t think these companies would’ve made it to the top positions if they were severely lacking in this category.

Customer service is such a high priority for businesses these days because it directly affects their reviews and therefore the number of customers and profits they make.

Extended Hours Trading

Premarket and after-market trading hours vary by brokerage. We aren’t going to go over which has which because we don’t recommend you do any trading during this time. Volume is low and it can compromise your buy-in price and therefore profit of an investment.

Availability Of Account Types

All of the top brokerage accounts offer both retirement and non retirement accounts. Most employers only have 401(k)s with the big ones, but individuals can open an IRA with any brokerage. This includes Robinhood and Sofi, which we’ll talk about later on.

Our Important Brokerage Criteria

The criteria that follow are what we consider to be the most important for anyone using our dividend and value investing strategy.

Just because we don’t find something important doesn’t mean that it’s not important to you. We will discuss some variation of needs when we rank the brokerages.

Fees

Fees suck and we like to avoid them whenever possible. Many times you don’t even realize there are fees because they’re hidden or you didn’t how something was a thing until you need to do it.

Because we’re talking about brokerage accounts, this list won’t include fees for actively managed types of investments like ETFs and mutual funds.

Closing Fees

That happened to us when we moved our money out of E-Trade and closed the account. There are stimulations, but you can pay anywhere from $0-$75 to close an account with E-Trade and Fidelity charges $50.

That feels just as violating as getting charged to close an unused gym membership after several months of wasting money. So be sure that you want to be with one of these companies before getting in, or at least aware of the closing fee.

Trading Fees

We already talked about trading fees being a non issue in the last section as any brokerages that made the list don’t have them for stocks and ETFs. It’s totally your call if you want to trade mutual funds, futures or options, but these are unnecessary for our investing strategy.

ETFs are have more options, flexibility and have lower management fees than mutual funds. Futures, meh, they have ETFs for that. And options… that’s what we use YieldMax ETFs for. We’re seeing more ETFs coming out like these.

Service Fees

The biggest fees are incurred if you need to make assisted trades with a company or need advisory services. The easiest way to avoid this is to educate yourself and learn to use your brokerage account.

Because of the increasing demand of advisory services many companies are starting to offer lower cost robo advisors. TD Ameritrade, Charles Schwab and Fidelity stand out here as 3 of the best.

Investing Opportunities

If you want to invest in different types of investments like equities, bonds, REITs or maybe in international markets, you need to consider whether your brokerage has options for you. Interactive Brokers offers access to 150 developed and emerging markets.

Because we live in the United States we’re in a great market with abundant opportunities. And many other options are available through ETFs and other funds or indexes versus directly investing in other markets.

Most of the top brokerage companies offer thousands of funds to choose from. E-Trade has the most bond options if you’re a lower risk investor who wants more fixed-income assets. Vanguard is known for its index funds.

Keep in mind that you may have limited investment opportunities if you’re using an employer 401(k) retirement account. If you want more flexibility you need to open a non retirement account, an IRA or 401(k) rollover to an IRA.

Research

There are two different types of research. Stock specific research and market research. Out of all of the brokerage accounts that we’ve had Charles Schwab is hands down the best when it comes to specific stock research.

They offer so many useful metrics all in one place that’s easy to access and compare. Many other brokerages may only have some of this information and it’s usually spread out across many different pages making it very cumbersome to evaluate (or even find).

It’s also extremely easy to determine of a stock has a preferred share. This isn’t an easy task in other brokerages. Some don’t even have the opportunity to invest in preferred shares.

Several reviewers have noted that E-Trade/Morgan Stanley (merged) is known for their topic research reports and you get access to their leading stock strategies and their thought leaders current take on the market.

Tim has evaluated the reports they provide and they lag behind compared to the information he gets from being signed up to many different publications — sometimes as much as 2 months!

Tools

Tools can be a wide range of things like risk-tolerance questionnaires, to budgeting tools, distributions calculators and screeners, which are an essential part of being able to find good dividend paying stocks.

Charles Schwab not only gets our vote but other analysts have noted them as having the most and most helpful for investors. E-Trade and Fidelity are also good contenders.

User Experience

We’re going to be defaulting to some information from a study that was done because they did a much more thorough evaluation of this criteria.

Ease Of Site Use

We often forget how important site navigation is until we need to find something. Our local department of transportation site is one of the worst! This isn’t something you want when you’re investing your money.

For us, unless the experience is horrible, we don’t really have an issue. Vanguard stands out as pretty bad. Charles Schwab and E-Trade got high marks on this study compared to other brokerages we’ve ranked.

Mobile App

According to this article, Fidelity, E-Trade and Charles Schwab have good brokerage apps. Schwab lost points because you can’t use their screener on their app.

Robinhood has one of the best mobile apps for those who have this as a high priority. For us, this is less important as we’d only be checking in. We much prefer to do our research and trades using desktop. Chromebooks are one of the cheapest and easiest ways to dedicate a desktop device to your investing.

DRIP

This should probably be part of ease of use, but since it’s so important for our strategy, we’ve broken it out.

All of our ranked brokerage accounts have DRIP available, but Tim’s experience has been that Vanguard is pretty difficult to figure out how to enable it. Robinhood is the same.

Low Cost Of Entry

Account Minimums

None of the top brokerage account we ranked in the next section have required minimums. Zero to open has become a standard practice to remain competitive.

There is also no required minimum balance needed, but this should be moot if you’re opening an investing account to fund and grow.

Some of the higher tier accounts may require minimums for perks.

Another thing to note is that Vanguard index funds typically have high initial buy-in investment requirements. These range from $1,000 to $3,000. This is similar to the way that bonds work.

Fractional Shares

Because many people don’t have the money to buy full shares of bigger popular companies and crypto has allowed you to buy fractional tokens pretty much since inception, many brokerage companies are starting to change the way they do business to make investing available to everyone.

Charles Schwab was the first major brokerage to offer fractional shares, but this option is only available for the 30 top U.S. companies. Vanguard offers fractional share purchases of Vanguard ETFs only.

Fidelity offers investors over 7,000 stocks and ETFS to buy as fractional shares and options start with as little as $1. Robinhood is very comparable with some fractionals being as small as 1/1000000 of a share! Sofi’s is also in the fractional game. Theirs start at $5.

Additional Perks

Charles Schwab has the banking with high checking interst, all ATM fee reinburment and no foreign transaction fees. Free check writing, Seamless account transfer between checking and brokerage.

Sofi banking, loans,

Our Brokerage Ranking

Charles Schwab

This is my #1 choice when it comes to a brokerage account because of the amount of data that is provided when I’m doing research on tickers.

offers a range of investment services. It provides a user-friendly platform, competitive fees, a diverse selection of investment options, and access to research and educational resources.

Charles Schwab provides a wide range of income-generating investment options, including dividend stocks, bonds, and access to mutual funds and ETFs with dividend focus. They offer research tools, educational resources, and a platform that caters to income-oriented investors.

Pros

• Wide array of investments
• Low cost for trades
• Robust Research and Educational Resources: Schwab provides access to a wealth of research and educational materials, including market insights, analysis, and tools. This can be valuable for income investors looking to make informed decisions and stay updated on market trends.
• Dividend Reinvestment Program (DRIP)
• Strong Customer Service: Charles Schwab is known for its excellent customer service and support. They offer assistance through various channels, including phone, email, and online chat, making it convenient for investors to seek help or address any concerns.

Cons:

1. Limited Banking Services: While Charles Schwab offers some banking services, such as a checking account and debit card, it doesn’t provide a full suite of banking features compared to traditional banks. This may not be ideal for income investors seeking a one-stop-shop for both investing and banking needs.
2. Inactivity Fees: Schwab imposes inactivity fees on accounts that don’t generate a certain level of trading activity or maintain a minimum balance. If you’re a passive income investor who doesn’t engage in frequent trading, these fees can erode your returns.
3. Limited International Markets: While Charles Schwab provides access to international investments, the selection of international markets may be somewhat limited compared to specialized international brokerage firms. If you have a strong focus on international income investments, you may find other brokers with broader international offerings.
4. Research Limitations: While Schwab offers research and educational resources, the depth and breadth of their research may not be as comprehensive as specialized research providers or dedicated investment research platforms. Income investors who heavily rely on detailed research and analysis may want to supplement their knowledge with additional sources.
5. No Direct Real Estate Investment: If you’re interested in income investing through real estate, Charles Schwab primarily focuses on traditional securities. They don’t offer direct real estate investment options like some specialized platforms or real estate investment trusts (REITs). For real estate income investors, alternative brokerage platforms may be more suitable.

Fidelity Investments

Fidelity is another popular brokerage account that offers a comprehensive suite of investment options. It provides a robust online platform, low-cost investment products, retirement planning tools, and excellent customer service.

Fidelity offers a robust selection of income-focused investment products, such as dividend stocks, bond funds, fixed-income investments, and high-yield bond offerings. They provide extensive research and screening tools to identify income-generating opportunities.

Pros of using Fidelity for income investing:

1. Broad range of investment options: Fidelity offers a wide array of investment choices, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), and more. This gives you the flexibility to build a diversified portfolio that aligns with your income investing goals.
2. Research and educational resources: Fidelity provides investors with access to extensive research and educational materials. They offer in-depth analysis, market insights, tools, and educational content to help you make informed investment decisions and stay updated on market trends.
3. Robust trading platform: Fidelity’s trading platform is user-friendly and equipped with advanced tools and features. It allows you to execute trades efficiently and monitor your investments effectively. Additionally, Fidelity offers mobile apps, which enable you to manage your investments on the go.
4. Competitive pricing: Fidelity offers competitive pricing on its investment products and services. They have a variety of commission-free ETFs and mutual funds, and their stock trading fees are relatively low compared to some other brokerage firms. Lower fees can be advantageous, especially for income investors focused on maximizing returns.

Cons of using Fidelity for income investing:

1. Account minimums: Fidelity has minimum investment requirements for certain types of accounts. For example, to open a brokerage account, you may need to meet a minimum balance requirement. This could be a limitation for individuals with limited funds or those who are just starting their income investing journey.
2. Advisory fees: While Fidelity offers self-directed investing options, they also have advisory services that come with management fees. If you opt for professional assistance or a managed account, you’ll need to consider the associated fees, which can vary depending on the service level and account balance.
3. Limited access to certain investments: While Fidelity provides a wide range of investment options, there may be some niche or specialized investment products that are not available on their platform. If you have specific investment preferences or want access to a broader spectrum of alternative investments, you might find the selection limitations of Fidelity to be a drawback.
4. Customer service: While Fidelity generally has good customer service, some users have reported occasional issues with response times or difficulty reaching a representative. If prompt and easily accessible customer support is a priority for you, it’s worth considering this potential con.

TD Ameritrade

: TD Ameritrade is known for its powerful trading platform and a wide range of investment options. It offers a variety of investment products, research tools, educational resources, and has a strong reputation for customer support.

TD Ameritrade: TD Ameritrade provides access to a variety of income-generating investments, including dividend stocks, bonds, and preferred stocks. They offer a comprehensive research platform, including access to third-party research reports and educational materials.

Pros:

1. Wide range of investment options: TD Ameritrade provides access to a broad array of investment products, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), options, and more. This variety allows you to diversify your income investment portfolio.
2. Research and educational resources: TD Ameritrade offers a wealth of research and educational tools. You can access market analysis, company research, news updates, and educational content to help you make informed investment decisions.
3. User-friendly platform: TD Ameritrade’s trading platform is known for being intuitive and user-friendly. It provides a robust set of features, including real-time quotes, customizable charts, technical analysis tools, and the ability to place trades easily.
4. No commission fees: TD Ameritrade eliminated its commission fees for online stock, ETF, and options trades in 2019. This makes it more cost-effective for income investors who frequently buy and sell securities.
5. Advanced order types: TD Ameritrade offers advanced order types, such as stop-limit orders, trailing stops, and conditional orders. These tools can help you manage risk and execute more precise investment strategies.

Cons:

1. Limited international markets: TD Ameritrade’s focus is primarily on the U.S. market. While it provides access to some international stocks and ADRs (American Depositary Receipts), the selection is more limited compared to brokers with a stronger international presence.
2. High minimum investment for certain funds: Some mutual funds on TD Ameritrade’s platform may have minimum investment requirements that can be relatively high. This may restrict access to certain funds for investors with smaller portfolios.
3. Potential for information overload: While TD Ameritrade offers a wealth of research and educational resources, it can also be overwhelming for novice investors. The abundance of information might make it challenging to navigate and filter the most relevant insights.
4. Customer support quality: In recent years, there have been some reports of declining customer service quality following the acquisition by Charles Schwab. However, experiences can vary, and it’s important to consider individual preferences and requirements when assessing customer support.
5. Inactivity fees: TD Ameritrade imposes inactivity fees on accounts that do not generate a certain level of trading activity. If you’re a long-term income investor who holds securities for extended periods, this may not be a significant concern. However, it’s important to be aware of these fees if you have a more active trading style.

ETRADE

: ETRADE is a well-known brokerage account that offers a user-friendly platform and a wide range of investment choices. It provides access to stocks, bonds, options, and mutual funds, along with educational resources and tools for active traders.

ETRADE offers a diverse range of income-oriented investment options, including dividend stocks, bonds, bond funds, and REITs. They provide access to research tools, real-time data, and educational resources that can assist income-focused investors.

Pros:

1. Wide Range of Investment Options: E*TRADE provides access to a diverse selection of investment vehicles, including stocks, bonds, exchange-traded funds (ETFs), mutual funds, and options. This variety allows you to construct a well-diversified income portfolio based on your investment goals.
2. User-Friendly Platform: E*TRADE offers a user-friendly online platform that is easy to navigate and provides access to comprehensive research tools, educational resources, and real-time market data. This can be beneficial for investors who are new to income investing or prefer a user-friendly interface.
3. Dividend Reinvestment Program (DRIP): E*TRADE offers a Dividend Reinvestment Program (DRIP), allowing you to automatically reinvest dividends earned from income investments back into additional shares. This feature can help compound your investment returns over time.
4. Competitive Pricing: E*TRADE offers competitive pricing with relatively low commission fees for stock and ETF trades. This can be advantageous for income investors, particularly if you plan to make frequent trades or invest in ETFs.
5. Robust Customer Support: E*TRADE provides customer support through multiple channels, including phone, email, and live chat. They also offer educational resources, webinars, and seminars to assist investors in making informed investment decisions.

Cons:

1. Account Maintenance Fees: E*TRADE charges an annual account maintenance fee. While the fee can be waived by meeting certain account balance or trading activity requirements, it’s important to consider this cost, especially if you have a smaller investment portfolio.
2. Limited No-Transaction-Fee (NTF) Mutual Funds: Although E*TRADE offers a selection of no-transaction-fee (NTF) mutual funds, the choices may be more limited compared to some other brokerages. If you plan to invest primarily in mutual funds, it’s worth reviewing the available options and associated fees.
3. Inactivity Fee: E*TRADE imposes an inactivity fee if you don’t make any trades or have no account activity for an extended period. This fee can be avoided by maintaining a minimum account balance or making regular trades, but it’s important to be aware of this potential cost.
4. Margin Interest Rates: If you plan to use margin (borrowed money) for income investing, E*TRADE’s margin interest rates may not be as competitive as those offered by other brokerages. It’s crucial to evaluate the borrowing costs before utilizing margin trading.
5. Lack of Personalized Advice: While ETRADE offers research tools and educational resources, it does not provide personalized investment advice or financial planning services. If you require professional guidance or prefer a more hands-on approach to investing, you may need to seek advice from a financial advisor outside of ETRADE.

Vanguard

: Vanguard is renowned for its low-cost index funds and ETFs. It is known for its commitment to low fees, long-term investing, and a focus on passive investment strategies. Vanguard also offers a range of brokerage services.

Vanguard is known for its low-cost index funds and ETFs, which can be suitable for income investors seeking broad market exposure. Vanguard also offers a range of dividend-focused funds and bond funds. Their emphasis on low fees can be advantageous for income investors seeking to maximize returns.

Pros:

1. Diverse Investment Options: Vanguard provides a wide array of investment options, including low-cost index funds, mutual funds, and exchange-traded funds (ETFs). This allows you to build a diversified income portfolio tailored to your specific needs.
2. Low Expenses: Vanguard is known for its low-cost investment options. They are committed to offering funds with low expense ratios, which can be beneficial for income investors as it reduces the impact of fees on your overall returns.
3. Passive Investing Approach: Vanguard is a proponent of passive investing strategies, such as index fund investing. This approach seeks to match the performance of a market index rather than trying to beat it. Passive investing can be attractive for income investors who prefer a long-term, low-maintenance approach.
4. Dividend Reinvestment: Vanguard offers dividend reinvestment plans (DRIPs) that allow you to automatically reinvest your dividend income back into the investments that generated them. This can help compound your returns over time and potentially increase your income.
5. Investor Education and Research: Vanguard provides educational resources and research tools to help investors make informed decisions. They offer market insights, articles, and calculators that can assist you in evaluating income-generating investments and understanding their potential risks and rewards.

Cons:

1. Limited Brokerage Services: Vanguard primarily focuses on long-term investors and is not known for offering a wide range of trading services or advanced trading platforms. If you are an active trader or require complex trading tools, you may find Vanguard’s offerings limited.
2. Limited Investment Selection: While Vanguard offers a diverse range of investment options, they primarily focus on their own funds. If you have specific investment preferences outside of Vanguard’s offerings, you may find their selection limited compared to other brokerage firms.
3. Minimum Investment Requirements: Some of Vanguard’s funds have minimum investment requirements, which may be a drawback if you have a smaller portfolio or are just starting as an income investor. However, Vanguard has reduced or eliminated minimums for many of its funds in recent years.
4. Customer Service: Vanguard’s customer service is generally considered good, but some investors have reported longer response times and limited availability during peak periods. If you value prompt customer service, this could be a potential downside.
5. Lack of Active Management Options: If you prefer active management and want to invest in individual stocks or actively managed funds, Vanguard’s focus on passive investing may not align with your investment strategy. You may need to consider other brokerage options that offer a wider range of active investment choices.

Robinhood

: Robinhood gained popularity for its commission-free trading and easy-to-use mobile app. It caters to beginner investors and offers a straightforward platform for buying and selling stocks, ETFs, and cryptocurrencies.

Pros:

1. Commission-Free Trades: Robinhood pioneered the commission-free trading model, which allows investors to buy and sell stocks, ETFs, and options without incurring any trading fees. This can be advantageous for income investors who engage in frequent trading or dollar-cost averaging strategies.
2. User-Friendly Interface: Robinhood offers a simple and intuitive mobile app and web platform, making it easy for investors, especially beginners, to navigate and place trades. The platform’s user-friendly design appeals to those seeking a straightforward investing experience.
3. Fractional Shares: Robinhood introduced fractional share trading, allowing investors to buy and own a portion of a share rather than purchasing whole shares. This feature can be particularly useful for income investors looking to diversify their portfolio with high-priced stocks that they may not be able to afford otherwise.
4. Dividend Reinvestment: Robinhood supports automatic dividend reinvestment, which means any dividends earned from stocks or ETFs are reinvested back into the account to purchase additional shares. This can help income investors compound their returns over time.

Cons:

1. Limited Research and Analysis Tools: Robinhood’s platform offers limited research and analysis tools compared to more traditional brokerage firms. Income investors may find the lack of in-depth research and analysis capabilities limiting when evaluating potential income-generating investments.
2. Limited Investment Options: While Robinhood provides access to stocks, ETFs, options, and cryptocurrencies, it has a narrower selection of investment options compared to some traditional brokerage accounts. Income investors looking for a broader range of investment products, such as bonds, mutual funds, or alternative income-generating assets, may find Robinhood’s offerings insufficient.
3. Customer Support: Robinhood has faced criticism in the past regarding the quality and responsiveness of its customer support. Some investors have reported difficulties reaching customer service representatives or encountering delayed responses, which can be frustrating when dealing with account-related issues.
4. Order Execution and Trading Halts: Robinhood has experienced technical issues in the past, resulting in outages and trading halts during periods of high market volatility. Such interruptions can be disruptive for income investors who rely on timely execution of trades or who need access to their funds during critical market conditions.
5. Lack of Retirement Accounts: Robinhood currently does not offer retirement accounts like IRAs (Individual Retirement Accounts) or 401(k) plans. This may be a drawback for income investors who prefer to invest in a tax-advantaged retirement account to generate income for their long-term financial goals.

It’s important to thoroughly research and compare brokerage accounts based on your investment needs, including fees, investment product offerings, trading tools, customer service, and educational resources. Additionally, consider factors like account minimums, platform usability, and any specific features that align with your investment goals and preferences.

It’s important to note that the best brokerage account for income investing may vary depending on your specific investment goals, risk tolerance, and preferences. Consider factors such as investment product availability, fees, research resources, customer service, and ease of use when selecting a brokerage account for income investing. Conducting thorough research and comparing the offerings of different brokerages will help you find the one that best aligns with your income investing strategy.