What Is Stock Lending and How to Generate Passive Income with This Strategy in 2025
4/7/20253 min read
In the world of investing, there are many ways to earn a return — and not all of them involve buying and selling assets directly. One of the lesser-known (but highly effective) strategies is stock lending, a smart way for investors to generate passive income from shares they already own.
But how does stock lending work? Who can use this strategy? What are the risks involved? In this article, we’ll answer all these questions and show you how to make your investments work for you — increasing your income without selling a single share.
What Is Stock Lending?
Stock lending (also called securities lending) is a financial transaction where an investor (called the lender) lends their shares to another investor (the borrower) for a specific period in exchange for a fee — the lending yield.
This process is handled by Brazil’s stock exchange (B3), which acts as the intermediary and ensures the safety of the transaction. Borrowers are typically investors who want to short-sell (bet on a stock’s price drop) or temporarily cover a position.
For the lender, stock lending is an easy way to generate extra passive income from shares they already own, without losing access to dividends or missing out on capital appreciation.
Who Are the Participants in Stock Lending?
1. The Lender (the investor lending shares)
Typically long-term investors who hold stocks in their portfolio
Seek additional returns without selling their assets
Continue to receive dividends, interest on equity, and bonuses
2. The Borrower (the investor borrowing shares)
Usually short-term traders executing strategies like short selling
Need the shares temporarily for a specific strategy
Pay a lending fee to the lender for using the shares
3. The Brokerage Firm and B3
Brokers connect lenders and borrowers
B3 records, settles, and guarantees the transaction
How Does Stock Lending Work in Practice?
Step-by-step for lenders:
Own shares eligible for lending (typically liquid stocks with high demand for short selling)
Authorize lending through your brokerage — many platforms offer this automatically
When a borrower is matched, the transaction is registered with B3
The lender receives the agreed-upon rental fee — monthly or at contract end
At the end of the loan, the shares are returned to the lender
📌 Important: While the shares are on loan, the investor remains the legal owner. They continue to receive dividends and usually retain voting rights — unless stated otherwise in the contract.
How Much Can You Earn from Stock Lending?
Returns vary based on:
Market demand for the stock
Lending duration
Terms negotiated between lender and borrower
Average lending rates in 2025 (Brazil):
Highly liquid stocks (like PETR4, VALE3, ITUB4): 0.2% to 1% per year
Volatile or short-targeted stocks: 5% to 15% per year — even exceeding 20% in high-demand scenarios
Real example:
You own R$100,000 in stocks, lent at 5% per year.
➡ That’s R$5,000 in passive income annually, or roughly R$416 per month — without selling a thing.
Benefits of Stock Lending for the Lender
✅ Passive income without selling
Earn money on shares that would otherwise just sit in your portfolio.
✅ You still receive dividends
Lenders continue receiving all applicable payouts.
✅ Secure and regulated by B3
The stock exchange guarantees contract enforcement and operational security.
✅ Maintain liquidity
You can request the shares back at any time, typically with just 1 business day’s notice.
What Are the Risks of Stock Lending?
While it’s generally a safe strategy, there are some considerations:
⚠️ Market risk
The lending income is guaranteed, but the stock’s market value may drop. If you plan to sell later, you could incur losses.
⚠️ Counterparty risk
This is minimal thanks to B3's backing, but in extreme market stress, settlements could be delayed.
⚠️ Dividend delays
In rare cases, there may be a delay in dividend payments, but brokers typically resolve this quickly.
How to Start Lending Your Shares
1. Choose a brokerage that offers stock lending
Most brokers in Brazil offer this service. Popular options include:
XP Investimentos
Rico
Clear
BTG Pactual
NuInvest
Modal
Inter
2. Enable auto-lending
Many platforms offer “automatic lending,” where your shares are listed and rented out whenever there’s demand.
3. Track your returns
You can monitor your lending income and current loans through your brokerage dashboard or B3 account statement.
Who Should Use This Strategy?
Stock lending is especially useful for:
Long-term investors: who hold positions for years and don’t plan to sell soon
Passive investors: who focus on dividends and gradual wealth-building
High-volume holders: more shares = more passive income potential
Stock Lending vs. Dividends: What’s the Difference?
Type of IncomeSourceFrequencyTied to Company Performance?DividendsCompany profitsQuarterly / AnnuallyYesStock LendingFee paid by borrowerMonthly / PeriodicNo
These are complementary sources of income — and both can be earned at the same time.
Tips to Maximize Income from Stock Lending
Focus on high-demand stocks: especially volatile ones targeted by short-sellers
Hold volume: more shares mean more rental income
Keep your account active: shares need to be available to be borrowed
Negotiate when possible: in some cases, direct negotiation may yield higher rates
Conclusion: Is Stock Lending Worth It for Passive Income?
Absolutely — especially if you're a passive, long-term investor. Stock lending is a safe, simple, and effective way to increase returns on your existing portfolio without selling anything.
You stay in control of your shares, keep your dividends, and earn extra income just for letting your assets be borrowed. It’s one of the smartest ways to make your money work for you — with zero extra effort.
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