When an ETF pays a dividend, investors have the option to reinvest the dividend back into the ETF by purchasing additional shares, rather than receiving the dividend as cash. This is known as dividend reinvestment, which can compound your investment returns and dividend income over time.
Many brokerages allow you to enable dividend reinvestments for assets you choose automatically. If you reinvest your ETF dividends automatically, your broker will purchase additional fund shares at the current market rate when the dividend is received.
Note that even if you directly reinvest the dividend after receiving it, the IRS still considers it taxable income in the year it's paid. If you reinvest dividends, you should keep track of their "cost basis" (the original price paid for the shares), as it will affect the amount of capital gains tax owed when you sell the shares.