Talk me out of or into keeping individual stock

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Crow Hunter
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Talk me out of or into keeping individual stock

Postby Crow Hunter » Tue May 20, 2014 1:25 pm

My Mom recently passed away and left me some AT&T stock. Both she and my late father were employee's and purchased these outside of their retirement accounts over the years.

It is 1,300+ shares of common stock.

The mantra here at Bogleheads and one that I have suscribed to is no individual stocks only low cost index mutual funds.

However, while researching what I needed to do to transfer this to myself (it was a TOD account), I ran across the dividend history of the stock.

http://www.att.com/gen/investor-relations?pid=5675

It has averaged $.53/share since 1984, $.34/share since 2001, $.43/share since 2009.

It has always paid some type of dividend, ($.20/share average in 2004 was it's worst performing year).

It would be paying quite a bit more dividend wise than an equal $ amount of Vanguard Total Stock Market Admiral shares although it hasn't appreciated as much as VTSM.

So, what would you do if you were in my shoes?

Keep it and reinvest the dividends or sell it and invest the proceeds in a Vanguard TSM per my asset allocation.

And please let me know why you choose either option.

Thanks for your time.

YttriumNitrate
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Re: Talk me out of or into keeping individual stock

Postby YttriumNitrate » Tue May 20, 2014 1:30 pm

Well, if your total investment portfolio is more than a million dollars, I might keep it. Otherwise, I'd sell and put the $46k into something more diversified.

Edit: Searching through your old posts, it looks like you have about half million dollar portfolio (despite your efforts to delete your old posts). If I were you (and wanted to keep the AT&T stock) I'd probably sell half of it and keep the other half. That way, even if AT&T tanks you've only lost 5% of your portfolio.
Last edited by YttriumNitrate on Tue May 20, 2014 1:39 pm, edited 1 time in total.

bloom2708
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Re: Talk me out of or into keeping individual stock

Postby bloom2708 » Tue May 20, 2014 1:33 pm

I would sell and merge with your AA. You can't predict the market and owning a single stock is very risky.

If you tiptoe around your plan with this stock you might be inclined to do it here and there.

One consideration would be how much of a gain on these shares is there? If they purchased at $5 years ago, that might sway me to hold them.
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Crow Hunter
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Re: Talk me out of or into keeping individual stock

Postby Crow Hunter » Tue May 20, 2014 1:37 pm

bloom2708 wrote:I would sell and merge with your AA. You can't predict the market and owning a single stock is very risky.

If you tiptoe around your plan with this stock you might be inclined to do it here and there.

One consideration would be how much of a gain on these shares is there? If they purchased at $5 years ago, that might sway me to hold them.


They are inherited so my basis will be what the price was on the day she passed away so I will incur little to no capital gains/loss to sell them.

Buffetologist
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Re: Talk me out of or into keeping individual stock

Postby Buffetologist » Tue May 20, 2014 1:39 pm

Whatever you do, don't use the transfer agent to transfer it.

A relative got charged a hefty commission of 8% to process the transfer-on-death via the transfer agent. She didn't read the fine print.

Have Vanguard Brokerage service handle it for you. They won't rip you off.

Crow Hunter
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Re: Talk me out of or into keeping individual stock

Postby Crow Hunter » Tue May 20, 2014 1:43 pm

YttriumNitrate wrote:Well, if your total investment portfolio is more than a million dollars, I might keep it. Otherwise, I'd sell and put the $46k into something more diversified.


I would be approaching if not exceeding it and if you counted some real estate (farm and timberland hunting property) that I don't plan to sell but could if needed, it would definitely exceed it.

How would that change your calculus?

If you don't mind me asking.

ETA: Response to your edit. Counting all that I will be inheriting, it will push me over the $1,000,000 threshold. My current networth, not counting the inheritance is between $600-700k. I haven't updated my spreadsheet lately.
Last edited by Crow Hunter on Tue May 20, 2014 2:01 pm, edited 1 time in total.

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Toons
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Re: Talk me out of or into keeping individual stock

Postby Toons » Tue May 20, 2014 1:47 pm

I would hold it for at least 5 more years ,reinvest the dividends,then make a decision.
When I purchased individual securities years ago,albeit after I had mutual fund investments,I purchased them with a minimum of 10 year holding period reinvesting(compounding) along the way.When share prices took a nosedive over the years,upon reinvestment I garnered more shares.
They were Coke,Mcdonalds,Microsoft,Praxair,Walmart.That was over 20 years ago,still holding.
The thought of selling never crosses my mind :happy
:happy
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Crow Hunter
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Re: Talk me out of or into keeping individual stock

Postby Crow Hunter » Tue May 20, 2014 1:56 pm

Buffetologist wrote:Whatever you do, don't use the transfer agent to transfer it.

A relative got charged a hefty commission of 8% to process the transfer-on-death via the transfer agent. She didn't read the fine print.

Have Vanguard Brokerage service handle it for you. They won't rip you off.


I checked all the fine print and according to their literature there is no charge to transfer ownership on TOD accounts. And there wasn't when we transferred ownership of the account to the TOD a while ago.

Now I may have missed it, and I will make sure that I review everything again.

They do charge $10 plus $.10/share to do a batch sales order.

chazmania
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Re: Talk me out of or into keeping individual stock

Postby chazmania » Tue May 20, 2014 2:01 pm

It is difficult to give you an informed answer because of the limited amount of information you have presented here. This stock has a value of $45,000 or so. Jack talked about using a small percentage of your money to play with. If this is a small percentage of your wealth and you think you want to gamble it on one stock, then have fun and do so. But, you state you would need to divest your real estate to "approach" one million in wealth. So this may be a nice hunk of your invest-able assets.

If you consider it a good amount of money like I do, then take a closer look. Over the last 5 years the total market has doubled, yet this stock is up only about 50%. You mention in your note you are aware of this, but another factor you may not be considering can be summed up in two words, World Com. This company (World Com) was the number 2 long distance provider when it went bankrupt. Most likely, the shares you have inherited where acquired at a time when a hard wired world existed. Today's wireless world may not provide the same secure market for this stock, given the existence of Vonage and Walmart in the telephone service arena. Diversify my fellow boglehead!

Crow Hunter
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Re: Talk me out of or into keeping individual stock

Postby Crow Hunter » Tue May 20, 2014 2:10 pm

chazmania wrote:It is difficult to give you an informed answer because of the limited amount of information you have presented here. This stock has a value of $45,000 or so. Jack talked about using a small percentage of your money to play with. If this is a small percentage of your wealth and you think you want to gamble it on one stock, then have fun and do so. But, you state you would need to divest your real estate to "approach" one million in wealth. So this may be a nice hunk of your invest-able assets.

If you consider it a good amount of money like I do, then take a closer look. Over the last 5 years the total market has doubled, yet this stock is up only about 50%. You mention in your note you are aware of this, but another factor you may not be considering can be summed up in two words, World Com. This company (World Com) was the number 2 long distance provider when it went bankrupt. Most likely, the shares you have inherited where acquired at a time when a hard wired world existed. Today's wireless world may not provide the same secure market for this stock, given the existence of Vonage and Walmart in the telephone service arena. Diversify my fellow boglehead!


Actually my "fungible" net worth is somewhere between $600,000 and $700,000 although I haven't updated my spreadsheet since December. The small farm, timberland and home, cars, etc. are in addition to this.

I will be inheriting roughly $600,000 in fungible assets. So I should have a cash/stocks/bonds net worth somewhere around $1,200,000. But I don't have the exact numbers yet because I am still going through all the paperwork and have only submitted roughly half of the required forms. This was all calculated for when I was applying for the TN estate tax waiver.

But thank you for your comment and reasoning.

I am honestly right now leaning towards selling it and just sticking it in VSTM.

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bottlecap
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Re: Talk me out of or into keeping individual stock

Postby bottlecap » Tue May 20, 2014 2:25 pm

I hate dividends, except inside of a tax deferred account. Why would dividends be your only citeria of an investment?

JT

Crow Hunter
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Re: Talk me out of or into keeping individual stock

Postby Crow Hunter » Tue May 20, 2014 2:32 pm

bottlecap wrote:I hate dividends, except inside of a tax deferred account. Why would dividends be your only citeria of an investment?

JT


It isn't. I was just suprised that it has always been so consistent. I had often tried to talk my Mom out of keeping this stock and following the Boglehead advice and putting it into VTSM or something similar. She always told me no.

I am wondering if she had some wisdom about this that I am missing. But I figured I would ask the rest of the Borg (short fo Bogleheads.org, I just noticed that :shock: )and see what their opinion was.

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tetractys
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Re: Talk me out of or into keeping individual stock

Postby tetractys » Tue May 20, 2014 2:35 pm

AT&T, YUCK, dump it!

bucksfan2
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Re: Talk me out of or into keeping individual stock

Postby bucksfan2 » Tue May 20, 2014 2:39 pm

Roughly 1300 shares of T will throw off $2400 in dividends a year, reinvested would net you at today's price 67 shares a year.

If it were me I would keep the shares, continue to reinvest the dividend and then check back in 5 or 10 years. AT&T is a company who has raised its dividend over the past 10 years, even through the great recession (I know it could be the boogie man Enron), and I don't see that stopping anytime soon.

dickenjb
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Re: Talk me out of or into keeping individual stock

Postby dickenjb » Tue May 20, 2014 2:55 pm

Sell it and reinvest in VTSAX. You are taking uncompensated risk holding a single stock.

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Clark & Addison
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Re: Talk me out of or into keeping individual stock

Postby Clark & Addison » Tue May 20, 2014 2:59 pm

I'd sell it and put it into something more conservative. My wife had around $25,000 worth of individual stock (inherited from her grandma) in a regional bank when we got married at age 23/24 in 2007, which would have been a great start to our investing had we known then what we do now. Instead, the bank failed and the $25k turned to $0.

Waba
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Re: Talk me out of or into keeping individual stock

Postby Waba » Tue May 20, 2014 7:45 pm

The only reason to keep them would be large amounts of taxable cap gains, since that's not the case: sell!

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Toons
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Re: Talk me out of or into keeping individual stock

Postby Toons » Tue May 20, 2014 8:14 pm

bucksfan2 wrote:Roughly 1300 shares of T will throw off $2400 in dividends a year, reinvested would net you at today's price 67 shares a year.

If it were me I would keep the shares, continue to reinvest the dividend and then check back in 5 or 10 years. AT&T is a company who has raised its dividend over the past 10 years, even through the great recession (I know it could be the boogie man Enron), and I don't see that stopping anytime soon.


+1 :happy
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pennstater2005
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Re: Talk me out of or into keeping individual stock

Postby pennstater2005 » Tue May 20, 2014 8:28 pm

AT&T is looking to buy DirecTV. How will that affect the stock price? Good or bad? Things I would be thinking about if I held an individual stock.
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Re: Talk me out of or into keeping individual stock

Postby linenfort » Tue May 20, 2014 8:38 pm

Crow Hunter wrote:My Mom recently passed away and left me some AT&T stock.
...
So, what would you do if you were in my shoes?
Keep it and reinvest the dividends or sell it and invest the proceeds in a Vanguard TSM per my asset allocation.
And please let me know why you choose either option.


First of all, I'm very sorry for your loss.

If I were in your shoes, I would first ask myself, if I had 1,300 x the share price of AT&T (ticker:T) in cash, would I purchase 1,300 shares of T or do something else?
I would definitely do something else, and there are very few stocks that would produce a different answer. Maybe Berkshire.

Taxes are a consideration whether you're taking dividends or capital gains from sales.
I think I would talk to my accountant and work out a plan to sell some stock every year, reinvesting the proceeds in stock index funds and bonds.
In the meantime, I would enjoy that 5% yield on the unsold shares!
RIP Paul Kangas. "Wishing you the best of goodbyes."

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jfn111
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Re: Talk me out of or into keeping individual stock

Postby jfn111 » Tue May 20, 2014 8:41 pm

In my play money account AT&T represents 10.26%. I reinvest the dividends and it's been a good hold.

RadAudit
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Re: Talk me out of or into keeping individual stock

Postby RadAudit » Tue May 20, 2014 8:42 pm

I am sorry for your loss.

I was told, once upon a time, that if you are investing to take on only market risk if possible. Holding AT&T as a stock instead of in a mutual fund violates that rule and exposes you to a specific sector risk.

As a general rule, I believe performance of a specific stock may be influenced by the outlook for the sector it is in. I don't know and I don't care what the outlook for that sector is. But, I thought I heard that it maybe facing some consolidation. How AT&T will fair during that consolidation and the changing competitive environment that consolidation presents is something I don't know. If you are looking for improved stock price performance from AT&T it may be something to consider. If you are looking just for dividend yield, you can compare it to what TSM is throwing off and try to determine if the difference is worth the additional risk.

But to answer your question, I'd sell

Best of luck.
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Re: Talk me out of or into keeping individual stock

Postby Grt2bOutdoors » Tue May 20, 2014 8:46 pm

Crow Hunter wrote:My Mom recently passed away and left me some AT&T stock. Both she and my late father were employee's and purchased these outside of their retirement accounts over the years.

It is 1,300+ shares of common stock.

The mantra here at Bogleheads and one that I have suscribed to is no individual stocks only low cost index mutual funds.

However, while researching what I needed to do to transfer this to myself (it was a TOD account), I ran across the dividend history of the stock.

http://www.att.com/gen/investor-relations?pid=5675

It has averaged $.53/share since 1984, $.34/share since 2001, $.43/share since 2009.

It has always paid some type of dividend, ($.20/share average in 2004 was it's worst performing year).

It would be paying quite a bit more dividend wise than an equal $ amount of Vanguard Total Stock Market Admiral shares although it hasn't appreciated as much as VTSM.

So, what would you do if you were in my shoes?

Keep it and reinvest the dividends or sell it and invest the proceeds in a Vanguard TSM per my asset allocation.

And please let me know why you choose either option.

Thanks for your time.


First, the average dividends per share on a quarterly basis in the past means nothing in the present. Second, AT&T in its current form is the cumulative combination of no less than 6 different telecommunications companies. Third, AT&T stock has split numerous times, as has some of it's predecessor companies. Fourth, depending on when you inherited those shares, you may have a large gain, medium gain, small gain or no gain (stepped up cost basis from date of death). Finally, although I hold individual common stock including some of this one, you should view your current share position in the context of your entire portfolio, it should not be outsized relative to your entire portfolio if you do decide to keep some, nor should you feel compelled to keep any of it if it does not make you feel comfortable. A 1,300 share position sounds large, but not in the context of a multi million dollar portfolio, on the other hand if you said this position exceeded 5-7% of your total portfolio, I'd say to strongly consider diversifying out of it.
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Re: Talk me out of or into keeping individual stock

Postby Grt2bOutdoors » Tue May 20, 2014 8:48 pm

pennstater2005 wrote:AT&T is looking to buy DirecTV. How will that affect the stock price? Good or bad? Things I would be thinking about if I held an individual stock.


It's a positive for the combined company, but in particular for AT&T as their current dividend payout is quite high percentage wise, but if they could acquire DirectTV they could show a lower payout ratio with the additional cash flow the acquisition would bring to the consolidated company.
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Re: Talk me out of or into keeping individual stock

Postby Grt2bOutdoors » Tue May 20, 2014 8:53 pm

bucksfan2 wrote:Roughly 1300 shares of T will throw off $2400 in dividends a year, reinvested would net you at today's price 67 shares a year.

If it were me I would keep the shares, continue to reinvest the dividend and then check back in 5 or 10 years. AT&T is a company who has raised its dividend over the past 10 years, even through the great recession (I know it could be the boogie man Enron), and I don't see that stopping anytime soon.


If 50% of your money was tied up in T, would you still make that same decision above? The OP should view the holding in the context of the OP's entire portfolio value, if the value of the holding exceeds a comfort threshold of more than 5-7% of total holdings I would advise diversifying out of it. No one likes to wake up in the morning and find the dividend was cut or the stock price sliced in half. Just for the record, T has raised its dividend to such an extent that now it has to make that DirectTV acquisition to fund the dividend and lower the payout ratio so that it will still be able to fund capital expenditures without having to take on more debt.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

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Re: Talk me out of or into keeping individual stock

Postby Grt2bOutdoors » Tue May 20, 2014 9:01 pm

Crow Hunter wrote:
Buffetologist wrote:Whatever you do, don't use the transfer agent to transfer it.

A relative got charged a hefty commission of 8% to process the transfer-on-death via the transfer agent. She didn't read the fine print.

Have Vanguard Brokerage service handle it for you. They won't rip you off.


I checked all the fine print and according to their literature there is no charge to transfer ownership on TOD accounts. And there wasn't when we transferred ownership of the account to the TOD a while ago.

Now I may have missed it, and I will make sure that I review everything again.

They do charge $10 plus $.10/share to do a batch sales order.


That sounds like the transfer agent, Computershare stands to make a hefty commission on you if you use them. I find two problems with this, one by utilizing a batch sale price (the average price of all shares that Computershare sells during the day of the trade - they don't tell you how they arrive at this price or if they are directing the trade to an affiliated brokerage or other agent broker that provides them with compensation for directing the trading their way) you are prevented from setting the price you are willing to accept when selling - that is what is called a "limit order" in the open market - you set the price, if a buyer in the market is willing to pay your price per share, the trade will execute. Alternatively, you can also execute what is called a "market order" - that is, you take the price be offered in the market at the time you press the "send" button on your brokerage screen. Second, the price they will charge you - $10 + $130 or $140 to sell your shares is highway robbery when you could use an online brokerage such as Ameritrade or Fidelity where the commission is less than $10, period. That is money in your pocket as opposed to Computershare.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

ryk1861
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Re: Talk me out of or into keeping individual stock

Postby ryk1861 » Tue May 20, 2014 9:13 pm

Let me flip the question. Would you buy 1300 (or whatever) shares today if you inherited the same value in cash? No? then sell it.

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Re: Talk me out of or into keeping individual stock

Postby abracadabra11 » Tue May 20, 2014 9:44 pm

I've got one stock in my portfolio. It has underperformed my equity portfolio as long as I've had it (since 2010). I'm keeping it just as a reminder of why I shouldn't dabble in stocks. It's less than 1% of my total portfolio so I think I get more from keeping it (i.e. consistent reminder to stay the course and trust my AA) as opposed to trying to do better through research/evaluation of individual stocks.

Your choice is quite different since the stock makes up a much larger portion of your portfolio. I would be sensitive to the tax implications, but develop a plan to offload the individual stock and invest the money in my target AA instead.

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Re: Talk me out of or into keeping individual stock

Postby Crow Hunter » Wed May 21, 2014 7:05 am

Grt2bOutdoors wrote:
Crow Hunter wrote:
Buffetologist wrote:Whatever you do, don't use the transfer agent to transfer it.

A relative got charged a hefty commission of 8% to process the transfer-on-death via the transfer agent. She didn't read the fine print.

Have Vanguard Brokerage service handle it for you. They won't rip you off.


I checked all the fine print and according to their literature there is no charge to transfer ownership on TOD accounts. And there wasn't when we transferred ownership of the account to the TOD a while ago.

Now I may have missed it, and I will make sure that I review everything again.

They do charge $10 plus $.10/share to do a batch sales order.


That sounds like the transfer agent, Computershare stands to make a hefty commission on you if you use them. I find two problems with this, one by utilizing a batch sale price (the average price of all shares that Computershare sells during the day of the trade - they don't tell you how they arrive at this price or if they are directing the trade to an affiliated brokerage or other agent broker that provides them with compensation for directing the trading their way) you are prevented from setting the price you are willing to accept when selling - that is what is called a "limit order" in the open market - you set the price, if a buyer in the market is willing to pay your price per share, the trade will execute. Alternatively, you can also execute what is called a "market order" - that is, you take the price be offered in the market at the time you press the "send" button on your brokerage screen. Second, the price they will charge you - $10 + $130 or $140 to sell your shares is highway robbery when you could use an online brokerage such as Ameritrade or Fidelity where the commission is less than $10, period. That is money in your pocket as opposed to Computershare.


Since I know next to nothing about this. How could I go about getting it moved to Vanguard? (Where I have most of my other funds?)

I called and talked to them at it will be no cost to transfer the shares from th TOD account in my Mother's name to an account with my name only. Beyond that, I have no idea what to do. (No experience with individual stocks) This is one of the reasons I am leaning towards liquidating and moving to something I do understand (Vanguard Mutual funds).

Thank you for your time.

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Re: Talk me out of or into keeping individual stock

Postby bucksfan2 » Wed May 21, 2014 8:01 am

Grt2bOutdoors wrote:
bucksfan2 wrote:Roughly 1300 shares of T will throw off $2400 in dividends a year, reinvested would net you at today's price 67 shares a year.

If it were me I would keep the shares, continue to reinvest the dividend and then check back in 5 or 10 years. AT&T is a company who has raised its dividend over the past 10 years, even through the great recession (I know it could be the boogie man Enron), and I don't see that stopping anytime soon.


If 50% of your money was tied up in T, would you still make that same decision above? The OP should view the holding in the context of the OP's entire portfolio value, if the value of the holding exceeds a comfort threshold of more than 5-7% of total holdings I would advise diversifying out of it. No one likes to wake up in the morning and find the dividend was cut or the stock price sliced in half. Just for the record, T has raised its dividend to such an extent that now it has to make that DirectTV acquisition to fund the dividend and lower the payout ratio so that it will still be able to fund capital expenditures without having to take on more debt.


Maybe. I differ from the boglehead philosophy in that I like dividends, I like dividend paying stocks. AT&T has been a solid stock who has raised its dividend for the past 30 years. I am not worried about the Direct TV acquisition in regards to what it will do to the divy and the stock in general. A move like this has the potential of generating a large stream of cash in the future.

I also don't considered it "tied" up. If you transfer the money into a low cost brokerage a simple trade will cost you anywhere from $2-$10. I also believe that the cost basis the OP assumes is at the time of his mothers passing. So in essence he/she isn't paying for the gains his mother has assumed over the course of her holding. If it were 50% of my holdings it would be high and I may move to diversify that money. If it were a smaller amount of my holdings I would hold it in a discount brokerage where I knew I had the flexibility to sell if needed.

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Raymond
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Re: Talk me out of or into keeping individual stock

Postby Raymond » Wed May 21, 2014 8:24 am

Crow Hunter,

Sorry for your loss.

I went through this process of transferring individual stock shares from Computershare several years ago after my mother passed away.

You want to do a "transfer in kind" from Computershare to Vanguard.

1. Log on to your Vanguard account and go to "Funds, Stocks & ETFs".

2. Drop down to "Stocks, Bonds & CDs".

3. In the upper right-hand corner, click on the button in the dark gray box titled "Open an account: Open a Vanguard® account or transfer assets from another financial institution."

4. From the four choices on the list that comes up, choose "Transfer an account: Move nonretirement or IRA assets from another financial institution to a new or existing Vanguard account."

Go from there.

Vanguard will most likely require a Medallion guarantee from a bank, so see if your local brick & mortar branch does that.

After you send all the forms to Vanguard, they will take care of the transfer and contact Computershare, etc.

Be aware that if you have fractional shares (for example, 1300.0953 shares), Computershare will sell the 0.0953 share and transfer the remaining 1300 shares to Vanguard. Do not be surprised if the commission and fees for that sale reduce the proceeds you would have received for the fractional share to zero :annoyed

After the shares transfer, if you do not already have a Vanguard brokerage account, Vanguard will open one for you and put the transferred shares there. I would personally set the dividends to be deposited to the money market fund account (which they will also set up as the settlement account) and use those funds to rebalance elsewhere.

As for keeping the shares or selling them, that's up to you. I have been gradually selling my shares off (using limit prices) and using the proceeds to rebalance into my Vanguard funds. Alternatively, if there is a Really Bad Day (RBD), I may also tax-loss harvest shares as well.

[Edit] As mentioned earlier, I personally would NOT liquidate everything by selling while the shares are at Computershare - high fees and commissions, and you lose the flexibility of choosing when to sell - Computershare sells and buys only on specific days of the week or month.
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Re: Talk me out of or into keeping individual stock

Postby Grt2bOutdoors » Wed May 21, 2014 8:29 am

Crow Hunter wrote:
Grt2bOutdoors wrote:
Crow Hunter wrote:
Buffetologist wrote:Whatever you do, don't use the transfer agent to transfer it.

A relative got charged a hefty commission of 8% to process the transfer-on-death via the transfer agent. She didn't read the fine print.

Have Vanguard Brokerage service handle it for you. They won't rip you off.


I checked all the fine print and according to their literature there is no charge to transfer ownership on TOD accounts. And there wasn't when we transferred ownership of the account to the TOD a while ago.

Now I may have missed it, and I will make sure that I review everything again.

They do charge $10 plus $.10/share to do a batch sales order.


That sounds like the transfer agent, Computershare stands to make a hefty commission on you if you use them. I find two problems with this, one by utilizing a batch sale price (the average price of all shares that Computershare sells during the day of the trade - they don't tell you how they arrive at this price or if they are directing the trade to an affiliated brokerage or other agent broker that provides them with compensation for directing the trading their way) you are prevented from setting the price you are willing to accept when selling - that is what is called a "limit order" in the open market - you set the price, if a buyer in the market is willing to pay your price per share, the trade will execute. Alternatively, you can also execute what is called a "market order" - that is, you take the price be offered in the market at the time you press the "send" button on your brokerage screen. Second, the price they will charge you - $10 + $130 or $140 to sell your shares is highway robbery when you could use an online brokerage such as Ameritrade or Fidelity where the commission is less than $10, period. That is money in your pocket as opposed to Computershare.


Since I know next to nothing about this. How could I go about getting it moved to Vanguard? (Where I have most of my other funds?)

I called and talked to them at it will be no cost to transfer the shares from th TOD account in my Mother's name to an account with my name only. Beyond that, I have no idea what to do. (No experience with individual stocks) This is one of the reasons I am leaning towards liquidating and moving to something I do understand (Vanguard Mutual funds).

Thank you for your time.


Exactly as Raymond indicates below.

P.S. I'm sorry for your recent loss.
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Re: Talk me out of or into keeping individual stock

Postby Crow Hunter » Wed May 21, 2014 8:32 am

Raymond wrote:Crow Hunter,

Sorry for your loss.

I went through this process of transferring individual stock shares from Computershare several years ago after my mother passed away.

You want to do a "transfer in kind" from Computershare to Vanguard.

1. Log on to your Vanguard account and go to "Funds, Stocks & ETFs".

2. Drop down to "Stocks, Bonds & CDs".

3. In the upper right-hand corner, click on the button in the dark gray box titled "Open an account: Open a Vanguard® account or transfer assets from another financial institution."

4. From the four choices on the list that comes up, choose "Transfer an account: Move nonretirement or IRA assets from another financial institution to a new or existing Vanguard account."

Go from there.

Vanguard will most likely require a Medallion guarantee from a bank, so see if your local brick & mortar branch does that.

After you send all the forms to Vanguard, they will take care of the transfer and contact Computershare, etc.

Be aware that if you have fractional shares (for example, 1300.0953 shares), Computershare will sell the 0.0953 share and transfer the remaining 1300 shares to Vanguard. Do not be surprised if the commission and fees for that sale reduce the proceeds you would have received for the fractional share to zero :annoyed

After the shares transfer, if you do not already have a Vanguard brokerage account, Vanguard will open one for you and put the transferred shares there. I would personally set the dividends to be deposited to the money market fund account (which they will also set up as the settlement account) and use those funds to rebalance elsewhere.

As for keeping the shares or selling them, that's up to you. I have been gradually selling my shares off (using limit prices) and using the proceeds to rebalance into my Vanguard funds. Alternatively, if there is a Really Bad Day (RBD), I may also tax-loss harvest shares as well.

[Edit] As mentioned earlier, I personally would NOT liquidate everything by selling while the shares are at Computershare - high fees and commissions, and you lose the flexibility of choosing when to sell - Computershare sells and buys only on specific days of the week or month.


Wow.

Thank you for the detailed response. I didn't realize that it would be so simple/easy.

And thanks to others to who have helped. It will be a few weeks before all the paper work dust has settled so I will have some time to think about what I want to do. But I will definitely be transferring it to Vanguard even if I decide to keep it.

You guys/gals have definitely saved me some headache and some money plus given me a good framework to think about this in.

Thank you! :sharebeer

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Re: Talk me out of or into keeping individual stock

Postby Grt2bOutdoors » Wed May 21, 2014 8:34 am

bucksfan2 wrote:
Grt2bOutdoors wrote:
bucksfan2 wrote:Roughly 1300 shares of T will throw off $2400 in dividends a year, reinvested would net you at today's price 67 shares a year.

If it were me I would keep the shares, continue to reinvest the dividend and then check back in 5 or 10 years. AT&T is a company who has raised its dividend over the past 10 years, even through the great recession (I know it could be the boogie man Enron), and I don't see that stopping anytime soon.


If 50% of your money was tied up in T, would you still make that same decision above? The OP should view the holding in the context of the OP's entire portfolio value, if the value of the holding exceeds a comfort threshold of more than 5-7% of total holdings I would advise diversifying out of it. No one likes to wake up in the morning and find the dividend was cut or the stock price sliced in half. Just for the record, T has raised its dividend to such an extent that now it has to make that DirectTV acquisition to fund the dividend and lower the payout ratio so that it will still be able to fund capital expenditures without having to take on more debt.


Maybe. I differ from the boglehead philosophy in that I like dividends, I like dividend paying stocks. AT&T has been a solid stock who has raised its dividend for the past 30 years. I am not worried about the Direct TV acquisition in regards to what it will do to the divy and the stock in general. A move like this has the potential of generating a large stream of cash in the future.

I also don't considered it "tied" up. If you transfer the money into a low cost brokerage a simple trade will cost you anywhere from $2-$10. I also believe that the cost basis the OP assumes is at the time of his mothers passing. So in essence he/she isn't paying for the gains his mother has assumed over the course of her holding. If it were 50% of my holdings it would be high and I may move to diversify that money. If it were a smaller amount of my holdings I would hold it in a discount brokerage where I knew I had the flexibility to sell if needed.


I hold dividend paying individual equities too, but I also keep a close eye on them, if the payout ratios start to become too high it raises a red flag. Ah, the key word you say "potential" - potential doesn't pay the dividend or pay for capital expenditures or pay to keep the lights on - cash flow does, when the cash dries up, your sacrosant dividend will be the first to go before they cut capital expenditures or anything else. Exelon had said the same thing, we have no intention of cutting the dividend at an investors presentation of all places, exactly two months later, guess what? they sliced the dividend. The same thing occurred over at Century Telephone which had recently acquired another telecommunications company, Qwest International. :o Say it ain't so, Joe! My point is, if you're not going to invest the time in researching and watching, then it's best to take the proceeds and invest it in index funds or mutual funds that meet your overall portfolio objective.
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Re: Talk me out of or into keeping individual stock

Postby HomerJ » Wed May 21, 2014 10:49 am

bucksfan2 wrote:[Maybe. I differ from the boglehead philosophy in that I like dividends, I like dividend paying stocks. AT&T has been a solid stock who has raised its dividend for the past 30 years.


GE was a solid stock that raised it's dividend for 30 years.... Until it crashed 80%, and discontinued its dividend. It's still 33% down from it's peak in 2008 while the total market has recovered and then some.

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Re: Talk me out of or into keeping individual stock

Postby beammeupscotty » Wed May 21, 2014 12:15 pm

Crow Hunter wrote:My Mom recently passed away and left me some AT&T stock. Both she and my late father were employee's and purchased these outside of their retirement accounts over the years.

It is 1,300+ shares of common stock.

The mantra here at Bogleheads and one that I have suscribed to is no individual stocks only low cost index mutual funds.

However, while researching what I needed to do to transfer this to myself (it was a TOD account), I ran across the dividend history of the stock.

http://www.att.com/gen/investor-relations?pid=5675

It has averaged $.53/share since 1984, $.34/share since 2001, $.43/share since 2009.

It has always paid some type of dividend, ($.20/share average in 2004 was it's worst performing year).

It would be paying quite a bit more dividend wise than an equal $ amount of Vanguard Total Stock Market Admiral shares although it hasn't appreciated as much as VTSM.

So, what would you do if you were in my shoes?

Keep it and reinvest the dividends or sell it and invest the proceeds in a Vanguard TSM per my asset allocation.

And please let me know why you choose either option.

Thanks for your time.


TSM. Total return of T has barely beaten it since 1984 with a lot more volatility (using 500 Index prior to 1992 as a proxy). TSM is much less likely to go to zero.

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Re: Talk me out of or into keeping individual stock

Postby cfs » Wed May 21, 2014 12:31 pm

Sell or Retain

It is your decision to make. You have two options, but first you must take the best test for individual investors.

Here is The Pillow Test.

(1) I will sleep well at night after selling my individual stock and then investing all in the Total Stock Market Index.
(2) I will sleep well at night after selling my individual stock which I would like to retain for sentimental reasons.

If the answer is yes to questions 1 and 2, you are ready to sell the individual stock.
If the answer is no to questions 1 or 2, then you know what to do.

Thank you.

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Re: Talk me out of or into keeping individual stock

Postby bucksfan2 » Wed May 21, 2014 1:11 pm

HomerJ wrote:
bucksfan2 wrote:[Maybe. I differ from the boglehead philosophy in that I like dividends, I like dividend paying stocks. AT&T has been a solid stock who has raised its dividend for the past 30 years.


GE was a solid stock that raised it's dividend for 30 years.... Until it crashed 80%, and discontinued its dividend. It's still 33% down from it's peak in 2008 while the total market has recovered and then some.


GE never discontinued its dividend, it slashed it. GE has been a company that was hard hit and hasn't fully recovered. Where will it be in 5 years? Where will it be in 10 years? If you can answer those question with conviction let me know so I can act on it.

We can pick and choose stocks and how they reacted during generational type events. It could have been GE or Enron or it could have been AAPL or Google.

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Re: Talk me out of or into keeping individual stock

Postby HomerJ » Wed May 21, 2014 3:25 pm

bucksfan2 wrote:
HomerJ wrote:
bucksfan2 wrote:[Maybe. I differ from the boglehead philosophy in that I like dividends, I like dividend paying stocks. AT&T has been a solid stock who has raised its dividend for the past 30 years.


GE was a solid stock that raised it's dividend for 30 years.... Until it crashed 80%, and discontinued its dividend. It's still 33% down from it's peak in 2008 while the total market has recovered and then some.


GE never discontinued its dividend, it slashed it. GE has been a company that was hard hit and hasn't fully recovered. Where will it be in 5 years? Where will it be in 10 years? If you can answer those question with conviction let me know so I can act on it.

We can pick and choose stocks and how they reacted during generational type events. It could have been GE or Enron or it could have been AAPL or Google.


All I'm saying is individual stocks that have had solid dividends for 30 years can still crash hard. What makes AT&T so special that you can guarantee it won't crash?

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Re: Talk me out of or into keeping individual stock

Postby SGM » Wed May 21, 2014 11:23 pm

For sentimental reasons I might want to keep 300 shares of AT&T approx. 10k out of a 600k portfolio and put the balance in whatever broad low cost index stock or bond fund. The dividends could be reinvested in either the stock or the funds. I don't like to have greater than 5% of my investments in a particular stock. I hold several with large capital gains that I will judiciously sell over time. I know sentimentality is not a good reason for an investment, but I don't see much harm in the above.

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Re: Talk me out of or into keeping individual stock

Postby dumbbunny » Thu May 22, 2014 12:17 am

SGM wrote:I don't like to have greater than 5% of my investments in a particular stock.

In my pre-Boglehead life, I did this and slept well.
“It’s the curse of old men to realize that in the end we control nothing." "Homeland" episode, "Gerontion"

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Re: Talk me out of or into keeping individual stock

Postby hiddensee » Thu May 22, 2014 1:55 am

I would advise you to find the highest dividend yield stock in the S&P 500 and transfer your entire portfolio into it.

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Re: Talk me out of or into keeping individual stock

Postby Crow Hunter » Thu May 22, 2014 7:52 am

I have pretty much decided to join with the Borg on this one and cash it out and move it into VTSM. Several of the pointed comments related to the reverse of the current situation (as in would I take $40,000 and invest it in AT&T now) have helped me to refocus. I am not taking any of the cash inheritance and buying more AT&T stock, I will be putting it into VTSM. I had also already decided to move the income mutual funds and individual bond holdings from from my inherited portion of her taxable account into VTSM.

So honestly it really makes sense to do the same with the AT&T stock.

Especially since I am currently advising my Mother's sister, who has a very large stake in IBM due to employee purchases, to move it out of a single stock.

Thanks all! :sharebeer


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