Interactive Brokers vs Hargreaves Lansdown Which Is a Smarter Choice?

Interactive Brokers and Hargreaves Lansdown are two prominent brokerage firms with distinct approaches to stock trading. Interactive Brokers is known for its advanced trading platform, low fees, and extensive range of products, making it a favorite among active traders. On the other hand, Hargreaves Lansdown offers a user-friendly interface, robust research tools, and a strong reputation for customer service, attracting investors seeking a more hands-on approach to stock trading. Both platforms have their advantages, making the choice between them ultimately dependent on individual preferences and trading styles.

Interactive Brokers or Hargreaves Lansdown?

When comparing Interactive Brokers and Hargreaves Lansdown, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Interactive Brokers and Hargreaves Lansdown.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Interactive Brokers has a dividend yield of 0.47%, while Hargreaves Lansdown has a dividend yield of 4.14%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Interactive Brokers reports a 5-year dividend growth of 0.00% year and a payout ratio of 10.89%. On the other hand, Hargreaves Lansdown reports a 5-year dividend growth of 0.00% year and a payout ratio of 31.52%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Interactive Brokers P/E ratio at 27.97 and Hargreaves Lansdown's P/E ratio at 8.14. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Interactive Brokers P/B ratio is 4.69 while Hargreaves Lansdown's P/B ratio is 6.31.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Interactive Brokers has seen a 5-year revenue growth of 0.61%, while Hargreaves Lansdown's is 0.64%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Interactive Brokers's ROE at 18.13% and Hargreaves Lansdown's ROE at 82.68%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $177.55 for Interactive Brokers and $13.65 for Hargreaves Lansdown. Over the past year, Interactive Brokers's prices ranged from $78.93 to $193.42, with a yearly change of 145.05%. Hargreaves Lansdown's prices fluctuated between $8.63 and $15.13, with a yearly change of 75.32%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.