What Robinhood Stock Lending Does and What You Get Paid
Robinhood's stock lending program lets you earn money by allowing the platform to lend your shares to other traders, usually those who want to short-sell. You receive a portion of the lending fee — typically between 1% and 40% annually, depending on the stock — paid monthly to your account. The amount varies because Robinhood keeps a cut and the rate depends on how hard the stock is to borrow; stocks in high demand to short pay more.
You keep full ownership of your shares while they are lent out. You can still sell them at any time, and Robinhood will recall the borrowed shares from the borrower to complete your sale. You also receive dividends and voting rights as normal. The main trade-off is that your shares are held in Robinhood's name rather than your own, which is required for the lending to work.
Key Takeaways
- Stock lending payments range from 1% to 40% annually depending on the stock, and Robinhood pays you monthly, but you do not control which rate your shares receive.
- You retain the right to sell your shares at any time; Robinhood recalls borrowed shares automatically when you place a sell order.
- Your shares are held in Robinhood's name, not yours, which is a requirement of the lending program and affects how they are protected if Robinhood fails.
- The lending program is only available to Robinhood Gold members (paid subscription) and requires you to opt in; it is not automatic.
- Shares lent through Robinhood are not covered by SIPC protection in the same way as shares held in your own name, though Robinhood maintains insurance.
How Much You Actually Earn and What Affects the Rate
The payment you receive depends on two things: the lending rate for that specific stock and Robinhood's cut. Robinhood does not publish its exact split, but the rates shown in your account are what you will receive after Robinhood takes its portion. Stocks that are hard to borrow — often those with high short interest or limited float — pay higher rates. A stock might pay 2% annually while another pays 25% or more.
The rate for any given stock changes over time based on demand. If short interest drops, the rate drops with it. You have no control over which stocks lend at high rates; that is determined by market conditions. Robinhood updates rates regularly, and you can see the current rate for each stock you own in the app, but you cannot negotiate or shop around for better terms.
For most investors, the actual dollars earned are small. If you own $5,000 in a stock paying 5% annually, you earn about $21 per month. A stock paying 20% would earn $83 per month. The payment only makes sense if you already hold the stock and plan to keep it; it is not a reason to buy a stock you would not otherwise own.
Who Can Use Stock Lending and What It Costs to Join
Stock lending is only available to Robinhood Gold members, which costs $5 per month or $50 per year. You must have a Gold subscription to opt into the program. Without Gold, your shares cannot be lent, even if you want them to be.
Once you have Gold, you turn on stock lending in your account settings. It is not automatic; you must choose to participate. You can turn it off at any time, and Robinhood will stop lending your shares and recall any that are currently out. There is no penalty for opting out.
The Risk: How Your Shares Are Protected If Something Goes Wrong
When your shares are lent out, they are held in Robinhood's name, not yours. This changes how they are protected under SIPC (Securities Investor Protection Corporation). SIPC normally covers up to $500,000 per account if a brokerage fails. However, shares held in the brokerage's name for lending purposes are treated differently and may not receive the same level of protection.
Robinhood maintains additional insurance beyond SIPC to cover customer securities, but this insurance is not the same as SIPC protection and has limits. If Robinhood were to fail, there is a gap between what SIPC covers and what Robinhood's insurance covers. The risk is small — Robinhood is a large, regulated broker — but it is real and different from holding shares in your own name.
A second risk is counterparty risk: the person borrowing your shares could fail to return them. Robinhood is responsible for this, not you, but if Robinhood cannot recover the shares, you could lose them. Again, this is rare, but it is a risk that does not exist if your shares are not lent.
Comparing Stock Lending to Other Ways to Earn on Holdings
Stock lending is not the only way to earn money on shares you already own. Covered call writing — selling call options against your shares — often pays more than lending, especially in volatile markets. A single covered call can pay 1% to 3% per month, far more than most lending rates. However, covered calls cap your upside if the stock rises sharply, and they require you to understand options.
Dividend-paying stocks pay regularly without any action from you and without the risks of lending. The trade-off is that dividend rates are usually lower than lending rates for the same stock, and not all stocks pay dividends. You can also combine both: own a dividend stock and lend it for additional income.
For most investors, the difference between earning 5% from lending and earning 2% from dividends is small enough that the added complexity and risk of lending may not be worth it. The math changes if you own a stock that lends at 20% or higher, which is rare.
When Stock Lending Makes Sense and When It Does Not
Stock lending makes sense if you meet all of these conditions: you already own the stock and plan to hold it long-term, you have Robinhood Gold (and the $5 monthly cost does not bother you), the stock lends at 10% or higher annually, and you are comfortable with the small additional risks of lending. In this scenario, you earn extra money on a holding you were not planning to sell anyway.
Stock lending does not make sense if you own the stock short-term and plan to sell soon, because the lending payment will be small relative to the time you hold it. It also does not make sense if the stock lends at 1% to 5% annually, because the payment is minimal and the Gold subscription cost eats into your profit. And it does not make sense if you are uncomfortable with your shares being held in Robinhood's name or if you want full SIPC protection.
How to Turn Stock Lending On or Off in Your Account
To enable stock lending, open the Robinhood app and go to your Account settings. Look for the Stock Lending section under Investing or Securities. You will see a toggle to turn it on. Once enabled, any shares you own in your account become available to lend. You do not have to do anything else; Robinhood handles the rest.
To turn it off, return to the same section and toggle it off. Robinhood will recall any shares currently lent out within one to three business days. You will stop receiving lending payments once the recall is complete. You can turn it back on at any time.
You can also see the lending rate for each stock you own in the app. Tap on a holding and look for the lending rate or yield information. This rate is what you will receive, already adjusted for Robinhood's cut.
Frequently Asked Questions
Can I sell my shares while they are being lent out?
Yes. When you place a sell order, Robinhood automatically recalls the borrowed shares from the borrower. The recall usually takes one to three business days, but your sell order will not execute until the shares are back in your account. You will not be stuck holding the stock.
Do I pay taxes on stock lending income?
Yes. Lending payments are taxed as ordinary income in the year you receive them. Robinhood reports this income to the IRS on a Form 1099-INT or similar document. You must report it on your tax return, just like dividend income or interest.
What happens to my dividends if my shares are lent out?
You receive the full dividend. Robinhood ensures that dividend payments go to you, not the borrower. This is a legal requirement, and Robinhood handles it automatically. Lending does not affect your dividend rights.
Is stock lending the same as margin lending?
No. Margin lending is when you borrow money from Robinhood to buy stocks. Stock lending is when Robinhood borrows your stocks to lend to others. They are separate programs with different risks and costs.
Can I choose which stocks to lend and which to keep?
No. When you turn on stock lending, all your shares become available to lend. You cannot pick individual stocks. If you want to keep some stocks unlent, you would need to turn off the program entirely or hold those stocks in a separate account.