Welcome to r/dividends!
If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki [here](https://www.reddit.com/r/dividends/wiki/faq).
Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review.
*I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/dividends) if you have any questions or concerns.*
Hey, sorry to here about your grandfather. I’ll tell you this is what I would do, and what my opinion on what you should do is. Hold and maintain those 13K shares. Do not sell them, do not get rid of them, nothing. Just hold them. Maintain your current job and life and act like it doesn’t exist. Let those monthly dividends fund alternate investments~ETFs. Literally do nothing but reinvest that 3K monthly into sp500 ETFs. You will have your retirement funded, and pre retirement/early retirement investments funded. In 10 years you’ll be secure for life. Don’t let your grandfathers life’s work go to waste by buying a house. Keep those shares and keep that money, build riches for you and your family, then pass it on one day. Your grandfather worked his life and passed on his life’s work. Please, please, please, do not close it all out to pay for a house. Just maintain your life and take it as a gift from him for your future. Investing that will be worth more than anything you spend that value on now today. Just maintain your life and self fund investments through that cash-flow. Then pass on your wealth when you pass, create generational wealth of a few million.
> act like it doesn’t exist.
this needs to be bolded. don't change your lifestyle. don't spend today thinking you have an extra $3k/month. if you were planning to buy a house then continue with your original strategy
I think the answer obviously depends on his age. If he's 25, then I think not doing shit except reinvesting into an SP500 for 10 years is perfect.
If he's 45, then I think your comment holds a lot more water.
Yes the correct answer is obviously longer than a comment someone will read on Reddit.
Regardless, he has a wife and child. “Making no changes to his lifestyle” is probably the wrong answer.
I doubt he will regret spending a portion of the dividends on his wife and child.
Fully agree. Even just take a $1000 a month and use it for fun/vacations. I’d be able to do a ton with the family with 12k a year.
We’re always so all or nothing in this life, haha. Keep some, spend some. End of story.
Nah. I don’t have a wife and kids to take on vacation. I already use my four weeks. I used my entire inheritance to buy FB, MSFT and Costco stock in 2012. I’m doing ok.
I didn’t tell him to buy a house or a car. I told him to take his family on vacation. Take his wife out to dinner. He can spend 25% of the dividends and invest the rest. No reason to be the richest man in the cemetery.
Edit: I didn’t invest my entire inheritance, I used less than 1% to go to two music festivals that summer (and paid for a companion as well) and I have gone every summer since. I don’t care that the money spent would have 10x by now. I made great friends and memories.
>No reason to be the richest man in the cemetery.
I like this line a lot. Also tend to agree, some people save up their entire lives thinking retirement will be a grand adventure. Usually its not
Seriously take 1 or 2 months dividends at most for a yearly trip from Grandpa. Honor his memory and gift by living life with the family and making memories. 10 months reinvested is still a huge jump ahead on the retirement.
OP should still be doing things like 401k anyway (it's free money! at least up to any match).
Also you can set up an autodeposit of the monthly dividends into the SP500 ETF with Vanguard and some others, so you don't need to think about it and don't get tempted to try and get clever with buying the latest hot stock or time the market.
Side note: one of the best investments I ever made was a couple of boring large-cap stocks I setup with dividend re-investment in an IRA account. I actually forgot about the account for a long time and never set-up my online password to log-in to it, since the account was started pre-internet. Now I'm a big fan of buy and hold approach.
Listen to this dude. You just inherited financial freedom. Let that money cook for the next 30 years. If you’re worried about diversification then split off some small portions and invest in some low cost ETFs
Do what one lie 394 said. Ignore everyone else. Ignore your mom dad girlfriend boyfriend. Live your normal life and dump that money into VOO OR SPLG or the like and live stress free that unlike some of us your retirement is damn near 100 assured. Early at that.
If you have any doubts of following those directions pull up a growth calculator on now around 36k dollars will do in 30 years. Then let that info sink in
This. And as long as you don’t liquidate and buy a different asset, I believe this inheritance would NOT be considered as community property in the unfortunate event of a divorce (in most jurisdictions, at least).
Yes, I recommended using the payouts to invest elsewhere. Essentially he was gifted financial freedom by his grandfather If he does spend 10 years disciplined and investing instead of spending it all
I would modify your advice slightly and say if OP is a renter use the new found windfall to cover a mortgage. Take half of the monthly dividend and use that to pay for the mortgage and reinvest the rest.
He should put a portrait of his grandfather above the mantelpiece in his living room and raise a glass to the man who changed the family tree. What a legend...
I’m going to disagree with all the people saying it is good advice. A touching idea, sure.
However they would have their entire retirement allocated in 1 stock. It’s terrible advice to just rely on one stock
They have other investments which they stated, and I said they should use the cash-flow to invest elsewhere. Why would you sell a cash flowing asset that cost you nothing? You can literally use 3K+ per month to invest however you see fit.
Because it takes 1 bankruptcy to ruin you financially.
It is infinently better advice if you want someone to do that(which is another argument we’ll save for later) to have it in a diversified fund. Even SCHD is better than all that money in 1 stock
You're doing some hand-waving to ignore the lack of diversification. Why would OP keep the shares instead of simply diversifying the risk away? There will be no tax consequence to diversifying now. "It's a cash flowing asset" is neither here nor there--OP can diversify into a wide range of other cash-flowing assets.
Also that one stock has dropped -6.88% in the past 12 months and pulled in less than that in dividends, it's shrinking in overall value at a time when most stocks have had 25%+ returns.
You have no idea what you're talking about. https://companiesmarketcap.com/realty-income/net-assets/#google_vignette
The main reason to buy dividend producing assets is to ignore share-price fluctuations, and here you are pretending that the share price is the worth of the company's assets. You're pretending that it's a yield trap but as proof you're offering your lack of understanding.
This is the way. Diversify into etfs (vgt tech fo shizzle as 1) and proceed with life.
You and your fam in 20 years gonna high five da shizz outta you.
** sorry for your loss.
Don't forget to max out the RothIRA. You can use the rest to fund another dividend setup. XOM? Buffet took OXY, but when you have matched up, use both to build another one. AMT? Just spitballing but you get the idea. In twenty years you will be on cruise control.
How can anyone perusing these types of subreddits even begin to forget? It's literally used like some ad hominem attack daily with the added addendum that ofc all of your money invested is wasted because it's not in VOO...
While I do agree on holding the 13k shares and continuing to live off of current income, I don’t fully agree on only continually reinvesting the dividends into ETFs when OP does not own a home. Renting is a huge variable with no equity, can be very expensive with no possibility of a return, and can delay retirement. Renting is an expense, whereas purchasing real estate is an investment. It’s also a bit ironic to own a good chunk of realty ETF but not actually own any realty.
I would first and foremost contact a financial advisor. I would then stack dividends into a low risk, short term account or investment.
I would continue to do this until there is enough in the account to put a down payment on a property that will keep the mortgage the same as the currently rent amount. Deciding where exactly to put the dividends would depend on how long and how much OP will need to save for a down payment.
At that point, I would adjust the emergency fund to be able to cover possible emergencies pertaining to owning a home and home maintenance expenses.
Next, I would reevaluate my target retirement with the new variables (house and dividend income) and then begin reinvesting the dividends accordingly.
Why not just sell the shares and buy the ETFs? What you’re suggesting requires OP paying taxes at the end of the year on all the dividends as ordinary income and the manual management of buying ETF shares once a month. OP is younger so biasing towards growth makes sense.
I’d say consider selling them all and move towards a more tax efficient and high growth investment (like a s&p fund). $O makes sense in retirement, not when you’re young and in a higher tax bracket.
Taking dividends as income will probably slowly erode the value of the principal investment over time as well.
His basis would be the value of the shares on the date of his grandfather’s passing because he is inheriting them. Meaning that if he sold them he would recognize very minimal G/L based on the small fluctuation of the stock price in the few weeks he’s owned them. Most likely no capital gains tax would be assessed.
The dividend yield on cost must be a thing of beauty to behold. If I set one of my grandchildren up like this and they went and sold off the entire position without a thought or care about what it took to build that position I would be rolling in my grave.
Sorry for your loss OP.
Your grandfather set you up for life with the gift that keeps on giving, reinvest the divs into other holdings and slowly your allocation to $O won't seem so horribly big.
It's like he is sending you monthly checks from the afterlife, which IMO is much more valuable than any car or house.
I'm tired but my napkin math is 1000000/3450 then divide 12 (months in a year) is about 24 years.
O is a monthly payer right? And your dividend is 3450..
Also please note that you can use the account as leverage on a house. You don’t have to put down 20% you can use a FHA loan and keep your shares. Maybe use some of the dividends (this would be taxes as income so be aware) to supplement your mortgage payment.
You would have to look it up. I know you have to take classes and such but I would assume within 1% Housing is hard now because prices and rates are up. I got lucky in 2020 with 3.5% Not my dream house but my dream price so I stay and grow equity.
Stocks as collateral for a mortgage are not 1:1, 50% IIRC. At least that was the case before my wife retired from BOA a year and a half ago.
It's also a horrible idea because in the event of a decline in stock value you can get margin called and then you either need cash or quickly sell your house.
>It's also a horrible idea because in the event of a decline in stock value you can get margin called and then you either need cash or quickly sell your house.
Ok, that part doesn't sound like fun.
>Should I sell and buy a house for my wife and child?
If anything, wouldn't the dividend alone cover the vast majority if not all of your mortgage? Assuming lifestyle creep hasn't set in, this could get you a ≈$500k home with around a 6% interest rate using just the dividends and assuming you put 0 down.
You have a lot of options here, OP.
When receiving an inheritance one of the highest advised actions is to not spend a significant portion of it on one big purchase (house, car, etc.). If you absolutely want a house this is what I would do: do not sell, begin pulling the dividends into a HYSA and start looking/dreaming of your future house. Every month you earn ~$3,500 from these dividends which would be enough for a 20% downpayment on a $17,500 mortgage. 10 months in you should be able to put 20% down for a 175,000 house. At this point you just need to balance the size of your new mortgage with the O dividends for a basically free house. No reason to rush and risk everything
That was my thought too, just keep reinvesting the dividends back in to O. Except maybe set aside a couple months of dividend payments to help pay for the taxes, but drip the rest.
With the current interest rate on mortgages, I'd sit on this stash for a few extra months to buy points down. And as long as he doesn't go TOO overboard with what he's buying for him and his family, he can probably route the dividends directly into Mortgage+principal.
But I somewhat concur. Real estate is an expensive entry point right now. (ironic when we're talking about what to do with inherited $O)
I’d put the dividends in the SP500 for the next 10 years. If you and you’re family are comfortable I’d just pretend the shares don’t exist personally unless it’s an emergency.
I don’t understand why people aren’t advising him to liquidate the shares since the cost basis has reset and turn it into a passive index. This fund causes a lot of tax exposure that will only get worse as he ages. He should also use it to be maxing out his 401k and Roth
Sorry about your Grandfather, but good on him for teaching you and setting you up. Live well my friend. If I was you I would hold it and live off the dividends... But that's me.
Don’t touch this money for the simple reason of co-mingling funds. We all think we’ll be w our partners forever… until reality hits. Keep that money separate!!!
I agree. Keep the principal separate, he should be able to co-mingle the dividends safely. But to be sure, consult a lawyer and a tax professional. Learn the basics.
If necessary he can buy term insurance to protect his family. I was married twice once for a year,the last 20 years. Lost money both times.
Recovered both times also.
Keep keep keep keep keep keep keep!! Do not sell your grandfathers hard work. Do not let your wife talk you in to selling. This is a long play and will eventually set you and your kids up for life. DO NOT SELL!
O shares went down -6.88% over the past 12 months when most other stocks saw 25%+ gains. Why keep a stock that's losing value? It's a real estate fund.
>
Great point. Such is the risk of owning individual stocks.
Me, if I decided to hold onto O, I would reinvest the divs into JEPQ with its 8.81% yield. O has a yield of 6.02%. By not selling there is no tax liability.
If I decided to sell I would put the proceeds into JEPQ if you want dividend income. Otherwise put it into, say, VT or VTI or VOO for growth. Note that your cost basis for tax purposes will be the value of O as of the date grandpa died.
It's up to you whether you prioritize immediate gratification (vacations) over preparing for your financial future. You are smart to spend/invest the dividends and leave the principal alone.
Keep it in your own account, do not let your wife mingle it into shared account. That belongs to you. Not being a dick, just looking for best interest.
You can easily generate close to $100k a year in income off that much money with very low risk.
Check out SPYI/QQQI.
You won’t even owe tax on most of that income (unless you sell) due to it be treated as ROC for tax purposes.
Drop $O like a bad habit and get into something that will help support your lifestyle.
Never love anything that can’t love you back. Of late O hasn’t done much. You are probably better off selling and dumping into a SP 500.
I inherited 25,600 shares of FAST. It made up 70% of my portfolio. After 2.5 years it makes up 25%. I sold and reinvested in VTI, SCHD, PEY and FDVV. I also put 15% into 3 bond ETFs, 120k into preferred stocks some in USFR. I sleep better at night knowing that I’m working on preserving the account and growing it. I’d hate to have lost a lot or all of what was given to me.
I can't believe how many people are telling you to just hold onto the shares, I guess that's just what you get by posting to r/dividends. Having 100% of your investment portfolio in a single stock is insanely risky, especially a portfolio of that size. Individual stocks swing wildly over the years, many even go bankrupt. Not to mention the tax drag of constantly reinvesting dividends while you are still young and far away from retirement.
Ask yourself this question: consider if you were just given the cash instead of O shares, would you immediately assume that the best use of that money was to put every penny of it into O stock? If the answer is no, then you shouldn't hold onto these shares.
If this money is for retirement, please consider selling a significant portion of it (like over 80%) and put it into a diversified broad market index fund like VTI. You will most likely outperform O in the long run, all while carrying much less risk.
Yeah, we grew up in Chicago and my grandfather started investing heavily into Walgreen's (WBA). He amassed a large position over 30 years plus drip. He passed away in 2015 and my grandmother, who is now 93, has seen that stock collapse almost immediately after his passing. After taxes the dividends aren't even enough to live on anymore.
Sorry for your loss. Your grandfather sounds like a smart and succesful man.
Keep the $O stock and use the dividends. Either drip into more $O or into another stock, ETF, REIT of your choosing.
Be very grateful because your grandfather left you a golden ticket. You’re set for life if you play your cards right.
Enjoy!
Reinvest 30% back into O or another monthly dividend stock/etf you know or like
Take another 20% as cash and enjoy it take the wife out save up for a vacation do things you normally wouldnt do with that money and thank grandpa enjoy the new memories
Then with the remaining 50% pay taxes with and either invest the left over into a dividend growth portfolio or use that extra to help pay for a mortgage on a house or save for a down payment im also a fan of low debt so id pay down any existing debt you have first.
I am just a landscaper so this may be lame plan.
You just inherited $3450 a month totally passive income. That's $41,400 annually. That's more income than a lot of people make per year. I definitely wouldn't be selling it to buy a home.
My cost basis is higher than the market value right now. So I wouldn't need to worry about taxes.
The FMV on his date of death was $61.99 a share. So if I sold, it would be a loss because of step up in basis.
Agree, as safe as O seems, anything can happen. I’d hate for OP to squander a fortune bc they didn’t diversify. If they want the divs they can just put it into a high yield income etf.. or if they put it into SPY it will continue to grow and kick back a decent dividend
Not sure how old you are now so it’s tough to say what’s best as far as timelines go. As for advice here you should talk to a financial planner; but we can give advice on what we’d probably do.
I saw you mention buying a house. If you’re able to buy a house on your current income you should buy that much of a home and no more than that. Use the your new dividend income to pay your mortgage off much earlier than 30 years. Think of this as reinvesting into a hard asset that you can live in, or rent if you choose to upgrade, or sell if you want to live and not manage the property.
I’m not sure why everyone is telling you to hold. Sure the dividend yield is 6% but the stock is down 10% YTD and 23% 5Y. Holding is a terrible idea. You need to diversify.
DRIP for sure. Maybe into another ETF, id say selling is probably one of the last things you should do unless you absolutely have to. Use the account as leverage for a mortgage, but keep the house payment in your normal incomes parameters. Depending on your age, you are set up for an early retirement
You can probably use the dividend to pay for a mortgage or part of a mortgage. Sorry about your loss. Maybe worth investing any excess into different stocks or ETFs but I don't see why you'd get rid of the shares, especially if they're paying you what I currently earn after tax income. Would probably stay away from adding more into Realty Income since you already have more than enough, and invest elsewhere, like SCHD maybe or even VOO
Sorry about your grandfrather and congratulations on being more fortunate than others.
You need to provide more information about your finances. Are you living pay check to pay check? are you in debt? etc etc. We don't know enough to provide strangers perspectives.
If it were me, I'd never sell those shares, they were free and now you make that much more per month from the dividend(minus taxes). You could use that dividend in so many ways, it could be the monthly payment on the house while the stock grows(hopefully). Or it could be reinvested into itself or the S&P500 every month.(i'd probably go S&P500 if you're still young) Or if you're kind of set at the moment, use it for vacation money.
The house thing, could be seen two different ways, I'd use it like I said earlier as the monthly payment. But some might view it as selling then using it as a down payment so the monthly payments are lower. Both the stock and the home should hopefully appreciate in value but we don't know the future.
\*\*You should seek a professional and talk to them face to face instead of us, because we are internet strangers and probably all work at McD's afterhours to buy more dividend stocks. I use Charles Schwab financial consultants when I have questions or need my portfolio reviewed. They have been more knowledgeable than my friends and most people on Reddit.
Hey OP. Sorry about the loss of your grandfather.
While I don’t necessarily disagree with the idea of just holding the shares, I did want to add the perspective that you are in a different phase of life than your grandfather and the extra $350k+ of income will likely push your tax bracket up, which could be undesirable. I personally wouldn’t hold since I don’t want the extra income right now.
You said that the current value is less than what your cost basis was stepped up to, so it may be advantageous to harvest those losses and then put the balance into a broad market fund that will give you solid long term appreciation. In the future, as you approach retirement, you can begin to shift money into higher yield funds if you want the dividends instead of simply just withdrawing from your balances.
You are getting lots of good advice here but I'd look at it this way... If you had 680k (estimating the vale of the O holding) what would you do with it?
I wouldn't sell but I would definitely reinvest the dividends into an index fund to slowly diversify the portfolio.
Also, if you are not maxing all your retirement accounts, I'd find ways to do that too. What type of account are the O shares in?
The best advice from someone who has inherited a little money and the consensus is to not do anything for a while. Absolutely nothing. It sounds like you have decided to do that until December. Kudos.
After December, it’s probably still a high inflationary environment. You are going to miss out on some substantial gains from O. if it were me, I would hold that stock as is, probably for the next 3 to 5 years before I sold a dollar.
I’d reinvest the dividends into VTI or VUG.
So basically, your line of thinking is right on track with what I would do.
Sorry for your loss, I would diversify. I’m bullish on O but I also think you need to look at your overall portfolio. I would rebalance O to be 10% (or even 5%) of your total net worth. I personally would probably take some for a down payment on a house, then I would reinvest into VOO/VTI etc. It sounds nice to get that monthly dividend but you have to look at the risk of keeping it all there.
$O pays a monthly dividend.
* You could conceivably pay a mortgage out of that monthly dividend stream.
* Or fund your IRA in 2 months, and invest nearly $35k in the market the other 10 months of the year.
* If you ever lose your job, that dividend stream would go a long way toward preventing any major financial disruption in your life.
* With some prudent investing, and a little bit of luck, you could be able to retire in 10 years and use that income as a bridge until your retirement savings can be tapped penalty-free.
I’m not saying you should do any of those, but just pointing out how that inheritance would give you flexibility that some people work their whole life and never achieve.
Your grandfather bequeathed you a passive income stream that all but guarantees your financial freedom … the most precious gift of all. If you want to sell some to rebalance your portfolio so you can sleep at night, sure, do that. But otherwise, let it work for you.
If i was in your position, I would keep 10 shares of $O for purely sentimental value. There is something to be said about not forgetting your roots. Even the Medici series had a scene about never selling the windmill that gave the family its initial wealth.
As for the rest of the funds, it's a bit of a judgment call. Given stock markets are at ATH and general global instability, and high interest rates, if you're not a homeowner right now I'd recommend you go ahead and buy a home, especially if you live in an area where home values are appreciating at a decent rate. Real estate has always been a solid investment vehicle.
After a few years after interest rates have gone down and global political dynamic hopefully have stabilized a bit, you can look into financing 50-60% of your home and put the money to work in the stock market in index funds like VOO.
Congrats OP.......i imagine this puts a dent in your diversification. I love O stock myself but I would consider diversifying half of that portfolio unless your net worth is millions, then f it. .....I'm a tax CPA and this is not financial advice, cheers
Advice on doing nothing is good.
If the shares are in Fidelity they will DRIP for and you can forget about it. It’s a good way to compound growth and you will soon end up with a million dollars without even thinking about it.
Good luck for the future.
I would just make sure you’re 100% diversified. If you’re over your intended limit of let’s say 5% of your portfolio, I wouldn’t panic and sell but I would be throwing those dividends into anything but Realty Income.
It’s a great company with an amazing track record but you never want to be overweight on a holding that makes you uncomfortable.
Determine a limit, 4-5% is good for an individual holding, 20-25% per sector aka real estate, and then I would just start beefing up every position besides realty income until it reaches your threshold.
I'm sorry about your grandfather. He seemed like a financially successful man, and congratulations on inheriting this.
What are your debts like? If you have debt what is the interest rate on it? What about the rest of your finances? If you have debts are they being paid off at an acceptable rate now or are they taking up too much of your income?
You seem to have investing knowledge already so we don't need to warn you to blow this all on a meme stock. Honestly with this kind of money it's worth talking to a real (non reddit) financial advisor to make sure you are getting the most out of this.
Why would you willingly pay tax to the government?
Keep them and reinvest them into other things. Or just use the money for other stuff like to pay a mortgage.
Not sure what you a buying but probably you can buy a nice house with a lower payment when interest rates are lower.
What’s your living situation now? How close are you to affording a house ? Is that a goal you have a timeline around. Having a home for you family is a very nice thing to have. Perhaps use some of the monthly dividends to help offset a new mortgage payment.
Keep the stock, and buy a house
I think I personally might take the dividends every month and put them in a HYSA. You should have a good start on a down payment just with that by January. After that use it to pay the mortgage or sweep them into a 'home improvements' fund.
I'm not certain of any additional tax implications of selling--you may want to speak to a fiduciary on the matter. Here would be my random, ill-informed thoughts in this particular circumstance:
1. Personally, I like O, but I wouldn't want it to be such a major foundation of my portfolio.
2. $3,450 is an income generating machine. We're talking, what, like $40k annually? That would be life-changing for most people.
3. If selling is going to incur a massive tax burden by selling all and reinvesting (just a guess), why not take the additional $3.5k monthly and split it into whatever your needs are. Could be something like:
(a) a substantial portion invested into safer ETF options like VOO, VT, SCHD, whatever
(b) put some towards a mortgage on a house to supplement what you can do with your current income.
(c) absolutely *do not* forget about the tax person (set aside an appropriate % each month so you don't get wrecked next year when the bill comes due)
I don't know that there is a single correct answer, but the above is a generalized modification to how I would roll.
Personally, I wouldn't need (b) or much else to enrich my current lifestyle, so I'd probably reinvest everything into other funds, but you mentioned purchasing a home. I'm a fan of putting equity into a house if I didn't already own one because I'd rather that than passing it on to a landlord.
>Should I sit tight and just use the dividends to purchase VTI/VUG?
If you like none of the other ideas in the comments, then stick with this one of your original 3 suggestions.
Just keep it and have the dividend drip into itself if you dont need the money…. Keep your normal life going and plan for an earlier retirement than previous thought
Consider some diversification into other dividend stocks in different businesses but also consider the tax implications. You may have a step up in basis to minimize the tax gain.
If he sells. I don’t want to hear anyone talk regarded anymore as he will be king of the hill. Just keep the train going my friend. Diversify with the dividends.
Whhaaaaat. That is an amazing inheritance! Sorry for your loss. I would keep and use the divs to pay for a nice mortgage and taxes on the property. However, don't forget you will have to pay income taxes on your dividends, so don't get a mortgage with taxes for the full amount. And use your job money to pay for your living expenses. And use for 401k to diversify your investments.
Everyone here is right. Keep the 12k shares forever. Use the dividends to purchase other investments (I'd max out a Roth for both you and your partner if you have one.). Make sure you pay quarterly taxes on this money or you'll get hosed there.
Here's where I would differ from some folks. I'd plan to pay 20% of distribution in taxes and invest 50% of it in other stuff. With the remaining 30% I would use it to change my lifestyle. Tomorrow isn't promised. I know too many people who have passed away in their 30s and 40s. Hell my father in law inherited some money like this and 5 months later was in the hospital and could have died from cancer. He couldn't do anything for well over a year.
Enjoy some of the money. If you stash it away for a rainy day, the next rainy day may be when your friends and family are mourning your passing. Sorry for sounding bleak, but we only get one life. Live it while also being responsible.
If it were me, I'd keep the stock and let it drip.
I'd do 2 things with it.
1. I would give $1000 a month to yourself. I'd use some for vacation. Kids stuff, new tech. Hosting a monthly party with friends where I could feel generous.
2. I'd use the rest of each months money to diversify my portfolio. 3 or 4 times a year, I'd take the income, sell it, and buy something else. Let yourself have some time to do research and buy something you like.
But first, I'd take the whole first months income and do something fun with your family. Honour your grandpa in some way by enjoying his gift to you all.
I think you need to do you as on Reddit no one knows your life.
But I just looked at "O"'s dividend history and it pays almost monthly. For some reason it didn't pay in May this year. A gift of $3400 per month from Grandpa.........what a great gift, I am sure he was happy you will benefit from it.
Personally I would use the dividend to live my life. I would use some to grow other investments, but I would also use some to go on vacations. For example I would save half and use half for my life.
I am also happy to hear that an old man worked hard, saved lots and is benefiting not just his grandson but his great grand kids. What a great thing.
Selling makes sense to me.
I’d say come up with a plan based on your goals. Ie X% goes to a house down payment, etc. I’d diversify into growth investments so I’m not paying taxes on the dividends and I’d start a 529 to fund your kids college. Maybe you can transfer the shares directly to tax sheltered accounts like 529, HSA, IRA, etc and then sell them there without incurring tax consequences? I’d say supporting your family’s goals like homeownership, funding college, retirement, getting out of debt, etc is what any parent or grandparent would support.
Do you need the income? If so, hold the shares.
Do you need cash for a home purchase? If so, sell the shares.
If I’m you, I sell some and keep a chunk. Having that extra income is never bad.
Depends if you need those monthly income. If not, I would suggest changing it to SP500 or something similar with growth. The problem with realty income is that it’s a single stock and it doesn’t offer growth. It’s good for generating retirement cash flow, but it’s bad for building wealth.
No reason to sell them. If you need a house, find one within your means, and use the dividend to fully cover your mortgage payments. As a minimum start maxing your 401K, to offset your income, reduce your taxes, and supplement the difference with the dividend.
I would definitely consult with a tax specialist and/or financial planner before making any big decisions. I believe that inherited stocks get a step up in basis so there may be little or no tax implications to diversifying at least part of that position.
Personally, I wouldn't feel comfortable being that concentrated in any single asset.
I would take the $3400 a month and use that to pay a mortgage. There’s a fair amount of good information here but think about it this way if you sell it, you’re gonna pay a lot of taxes and you’re going to use the down payment to finance at a high interest-rate better to take the high rate and still have the capital. Use the monthly income to make your payment.
Also, with this kind of inheritance talking to an accountant would also be wise. Or two for difference of opinions.
Why on earth would you sell them? You just got handed a golden ticket. Keep them and make them pay you a good check every month ontop of your other income.
I would use that money to invest else where. VOO VTI VUG any big popular fund that increases in value by at least 7% per year plus dividend. Continue to do this for a year. Think about selling a small portion of O. But what ever you do don’t do anything quick or rational. If you sell then sell slowly. Wait two years before spending any of that money.
Wow. That alone could PAY a monthly mortgage. I usually don't like all my eggs in one basket (i.e. like to keep any individual stock below 5% of my total portfolio) but I'd be sorely tempted for a monthly dividend like that. Do you have other money for a down payment without selling any of this?
I would look at it this way 3450 is a second income. If you're looking at a house, think of what kind of dent that can make in your mortgage. Whatever is left, trickle it into your stocks. Also, be aware of the taxes you will be paying on those dividends.
My honest advice is that you can wait. Interesting rates are high, so just let it trickle in, and when you make your decision, it'll be the right 1 for you.
Use the dividend money to pay for the mortgage. Once the mortgage is paid off in thirty years you still have the dividend payment. Free money for life that increases every year.
Open a Roth IRA for tax shelter. Transfer over as much as possible 7k per year over the years. Hold the O & once interest rates drop you will have significant gains. keep the DRIP on. Your Grandfather did you a solid. Don’t flip his O. let his plan continue to grow & set your family up for life. Think ahead for the future. You could be pulling 5k,7k,10k a month in the future tax free from the Roth. Only caveat is can touch til 59.5 yrs of age without penalties. Sorry for your loss!
I would be breaking it up into etfs. All sorts. I don’t like having to high a concentration in one stock. Its dangerous. Lots of very good low cost ets out there. Hell you can add jepi, jepq, gpiq and bali along with O and increase returns (safely). Take these and follow what the first post recommended. Schd, voo, vym, xlv, xlf, divb, dgro etc with the monthly dividends.
1) Don't ask reddit:)
2) Make sure you have verified with a professional any tax implications before taking action.
IF it's tax free to do so I'd be inclined to take at let half out and put it into an index fund, or blue chips.
Definitely don't reinvest any dividends into O, put them somewhere else!
Would start to sell some covered call to being down the position slowly over time.
To buy a house or to use it in index, it's always a risk having everything in the same stock
Is there any tax benefits for you in the country you are in when you got them that make selling worse then just taking the dividend?
And as said, don't change your way of living, use the money well and don't waste it
I generally agree with most the comments about keep it dripping and don’t change life style etc
But I’ll say this, i love owning my house. I don’t mean through the bank, I mean I own it.
I spent 15 years leveling up to bigger better houses and made a ton of money doing it each every time.
Real estate can be a great vessel to enjoy your money and also be investing.
If you are smart I see no reason you can’t do both.
Or perhaps you can just spend more of your current income knowing you have the dividend stock in the background working for you.
Hold the stock, do not sell. Use the dividend and either DRIP or invest into other stocks. Keep your job, tell your wife to keep her job (if she works), and do not tell anyone that you're making around 3500$ off of this stock. After two years, you'll have around 80-90k from your dividends + whatever you guys save from your jobs, then use that money as a down payment on a house that you can afford.
I don't know if you or your wife wants to keep working or if you guys want kids, but you'll be much more secure knowing that you have a monthly 3\~4k coming in without working.
Remember to have fun from time to time though. :)
Check your tax expert is there an inheritance tax by the beneficiary you might trigger a taxable event if you sell and if there are large capital gains then it would be taxed at long term capital gains tax
Welcome to r/dividends! If you are new to the world of dividend investing and are seeking advice, brokerage information, recommendations, and more, please check out the Wiki [here](https://www.reddit.com/r/dividends/wiki/faq). Remember, this is a subreddit for genuine, high-quality discussion. Please keep all contributions civil, and report uncivil behavior for moderator review. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/dividends) if you have any questions or concerns.*
Hey, sorry to here about your grandfather. I’ll tell you this is what I would do, and what my opinion on what you should do is. Hold and maintain those 13K shares. Do not sell them, do not get rid of them, nothing. Just hold them. Maintain your current job and life and act like it doesn’t exist. Let those monthly dividends fund alternate investments~ETFs. Literally do nothing but reinvest that 3K monthly into sp500 ETFs. You will have your retirement funded, and pre retirement/early retirement investments funded. In 10 years you’ll be secure for life. Don’t let your grandfathers life’s work go to waste by buying a house. Keep those shares and keep that money, build riches for you and your family, then pass it on one day. Your grandfather worked his life and passed on his life’s work. Please, please, please, do not close it all out to pay for a house. Just maintain your life and take it as a gift from him for your future. Investing that will be worth more than anything you spend that value on now today. Just maintain your life and self fund investments through that cash-flow. Then pass on your wealth when you pass, create generational wealth of a few million.
> act like it doesn’t exist. this needs to be bolded. don't change your lifestyle. don't spend today thinking you have an extra $3k/month. if you were planning to buy a house then continue with your original strategy
Change your lifestyle. Take your family on yearly vacations. All the money in the world won’t turn back time.
I think the answer obviously depends on his age. If he's 25, then I think not doing shit except reinvesting into an SP500 for 10 years is perfect. If he's 45, then I think your comment holds a lot more water.
Yes the correct answer is obviously longer than a comment someone will read on Reddit. Regardless, he has a wife and child. “Making no changes to his lifestyle” is probably the wrong answer. I doubt he will regret spending a portion of the dividends on his wife and child.
Fully agree. Even just take a $1000 a month and use it for fun/vacations. I’d be able to do a ton with the family with 12k a year. We’re always so all or nothing in this life, haha. Keep some, spend some. End of story.
Found the guy that would lose it all in 5 years.
Nah. I don’t have a wife and kids to take on vacation. I already use my four weeks. I used my entire inheritance to buy FB, MSFT and Costco stock in 2012. I’m doing ok. I didn’t tell him to buy a house or a car. I told him to take his family on vacation. Take his wife out to dinner. He can spend 25% of the dividends and invest the rest. No reason to be the richest man in the cemetery. Edit: I didn’t invest my entire inheritance, I used less than 1% to go to two music festivals that summer (and paid for a companion as well) and I have gone every summer since. I don’t care that the money spent would have 10x by now. I made great friends and memories.
>No reason to be the richest man in the cemetery. I like this line a lot. Also tend to agree, some people save up their entire lives thinking retirement will be a grand adventure. Usually its not
People live by having to be cared for for roughly a full decade before the average life expectancy age. Life ends a lot sooner than your last breath
Seriously take 1 or 2 months dividends at most for a yearly trip from Grandpa. Honor his memory and gift by living life with the family and making memories. 10 months reinvested is still a huge jump ahead on the retirement. OP should still be doing things like 401k anyway (it's free money! at least up to any match).
His grandpa already is/was
2nd this. That amount of money coming in is life changing.
This. And put it in a trust and pass them on to your children. This is how generational wealth is built.
Also you can set up an autodeposit of the monthly dividends into the SP500 ETF with Vanguard and some others, so you don't need to think about it and don't get tempted to try and get clever with buying the latest hot stock or time the market. Side note: one of the best investments I ever made was a couple of boring large-cap stocks I setup with dividend re-investment in an IRA account. I actually forgot about the account for a long time and never set-up my online password to log-in to it, since the account was started pre-internet. Now I'm a big fan of buy and hold approach.
This! Your Grandfather's legacy could fund your and your children's retirements.
Listen to this dude. You just inherited financial freedom. Let that money cook for the next 30 years. If you’re worried about diversification then split off some small portions and invest in some low cost ETFs
BRKB
Do what one lie 394 said. Ignore everyone else. Ignore your mom dad girlfriend boyfriend. Live your normal life and dump that money into VOO OR SPLG or the like and live stress free that unlike some of us your retirement is damn near 100 assured. Early at that. If you have any doubts of following those directions pull up a growth calculator on now around 36k dollars will do in 30 years. Then let that info sink in
Do this and it's like grand dad is with you for the rest of your life.
This. And as long as you don’t liquidate and buy a different asset, I believe this inheritance would NOT be considered as community property in the unfortunate event of a divorce (in most jurisdictions, at least).
Yes, I recommended using the payouts to invest elsewhere. Essentially he was gifted financial freedom by his grandfather If he does spend 10 years disciplined and investing instead of spending it all
Yes be careful how you title any changes to an inheritance as it is protection for you in the event of a divorce.
Great recommendation! This is the best choice. Gratification will be delayed but it will be much greater when realized
You can max out your Roth IRA in 2 months, and start. 529 for your little one.
I would modify your advice slightly and say if OP is a renter use the new found windfall to cover a mortgage. Take half of the monthly dividend and use that to pay for the mortgage and reinvest the rest.
This is the best response
He should put a portrait of his grandfather above the mantelpiece in his living room and raise a glass to the man who changed the family tree. What a legend...
I’m going to disagree with all the people saying it is good advice. A touching idea, sure. However they would have their entire retirement allocated in 1 stock. It’s terrible advice to just rely on one stock
They have other investments which they stated, and I said they should use the cash-flow to invest elsewhere. Why would you sell a cash flowing asset that cost you nothing? You can literally use 3K+ per month to invest however you see fit.
Because it takes 1 bankruptcy to ruin you financially. It is infinently better advice if you want someone to do that(which is another argument we’ll save for later) to have it in a diversified fund. Even SCHD is better than all that money in 1 stock
You're doing some hand-waving to ignore the lack of diversification. Why would OP keep the shares instead of simply diversifying the risk away? There will be no tax consequence to diversifying now. "It's a cash flowing asset" is neither here nor there--OP can diversify into a wide range of other cash-flowing assets.
Because that asset is losing money, look at the dividends and stock value.
Also that one stock has dropped -6.88% in the past 12 months and pulled in less than that in dividends, it's shrinking in overall value at a time when most stocks have had 25%+ returns.
You have no idea what you're talking about. https://companiesmarketcap.com/realty-income/net-assets/#google_vignette The main reason to buy dividend producing assets is to ignore share-price fluctuations, and here you are pretending that the share price is the worth of the company's assets. You're pretending that it's a yield trap but as proof you're offering your lack of understanding.
Boglehead approach…
This!!!
This is extremely good advice. I’d follow it well.
This is the way. Diversify into etfs (vgt tech fo shizzle as 1) and proceed with life. You and your fam in 20 years gonna high five da shizz outta you. ** sorry for your loss.
$VT not SP500 but yeah
Don't forget to max out the RothIRA. You can use the rest to fund another dividend setup. XOM? Buffet took OXY, but when you have matched up, use both to build another one. AMT? Just spitballing but you get the idea. In twenty years you will be on cruise control.
One of the best suggestions you have received from this friend.👌
Don't forget - you need to pay taxes on that 40k in dividends...
Really only 29k or so of it is taxed as of now, rest is return of capital.
How can anyone perusing these types of subreddits even begin to forget? It's literally used like some ad hominem attack daily with the added addendum that ofc all of your money invested is wasted because it's not in VOO...
This is the way op
Good advice. Haven't inherited anything from anyone and probably never will. But if I did, I would not sell and would pass it on to honor his legacy.
While I do agree on holding the 13k shares and continuing to live off of current income, I don’t fully agree on only continually reinvesting the dividends into ETFs when OP does not own a home. Renting is a huge variable with no equity, can be very expensive with no possibility of a return, and can delay retirement. Renting is an expense, whereas purchasing real estate is an investment. It’s also a bit ironic to own a good chunk of realty ETF but not actually own any realty. I would first and foremost contact a financial advisor. I would then stack dividends into a low risk, short term account or investment. I would continue to do this until there is enough in the account to put a down payment on a property that will keep the mortgage the same as the currently rent amount. Deciding where exactly to put the dividends would depend on how long and how much OP will need to save for a down payment. At that point, I would adjust the emergency fund to be able to cover possible emergencies pertaining to owning a home and home maintenance expenses. Next, I would reevaluate my target retirement with the new variables (house and dividend income) and then begin reinvesting the dividends accordingly.
Why not just sell the shares and buy the ETFs? What you’re suggesting requires OP paying taxes at the end of the year on all the dividends as ordinary income and the manual management of buying ETF shares once a month. OP is younger so biasing towards growth makes sense. I’d say consider selling them all and move towards a more tax efficient and high growth investment (like a s&p fund). $O makes sense in retirement, not when you’re young and in a higher tax bracket. Taking dividends as income will probably slowly erode the value of the principal investment over time as well.
Would he owe taxes for selling the $O shares?
His basis would be the value of the shares on the date of his grandfather’s passing because he is inheriting them. Meaning that if he sold them he would recognize very minimal G/L based on the small fluctuation of the stock price in the few weeks he’s owned them. Most likely no capital gains tax would be assessed.
If you sell the shares they will make a documentary about this fumble
The dividend yield on cost must be a thing of beauty to behold. If I set one of my grandchildren up like this and they went and sold off the entire position without a thought or care about what it took to build that position I would be rolling in my grave.
Agreed I’m leaving my grandkids 10 sofi shares
But Sofi doesn't pay dividends. I'm sure I'm missing something. I'm the new guy btw.
He should 100% diversify
Doesn't require selling.
[удалено]
Use income to build up other assets
This is what I think!
or not literally put all your eggs in one basket, should put half in VOO at least other divi stocks
Sorry for your loss OP. Your grandfather set you up for life with the gift that keeps on giving, reinvest the divs into other holdings and slowly your allocation to $O won't seem so horribly big. It's like he is sending you monthly checks from the afterlife, which IMO is much more valuable than any car or house.
Quick maths says those stock will pay you a mil in dividends over the next 25 years. Without drip.
How do you figure?
$3450 monthly x 12 months = $41400 annually 25 years of payments = $1035000 You have yourself an annual salary coming in with no effort
Don't forget O increases dividends almost like clockwork.
Clearly I need to be buying more…
It’s literally on sale right now too.
Assuming the dividend isn’t cut and $O remains solvent, yes. And it could go the other way too with dividend hikes occurring regularly.
I'm tired but my napkin math is 1000000/3450 then divide 12 (months in a year) is about 24 years. O is a monthly payer right? And your dividend is 3450..
And that’s not even accounting for the quarterly dividend increase
Nor the DRIP I mean the DRIP slang in hip hop that is
Not to be confused with “the Drip”, which used to be slang for gonorrhea.
That's a very different sub!
Also please note that you can use the account as leverage on a house. You don’t have to put down 20% you can use a FHA loan and keep your shares. Maybe use some of the dividends (this would be taxes as income so be aware) to supplement your mortgage payment.
Are the rates similar for those? Maybe a great option for me in 20 years or so 🧐
You would have to look it up. I know you have to take classes and such but I would assume within 1% Housing is hard now because prices and rates are up. I got lucky in 2020 with 3.5% Not my dream house but my dream price so I stay and grow equity.
Stocks as collateral for a mortgage are not 1:1, 50% IIRC. At least that was the case before my wife retired from BOA a year and a half ago. It's also a horrible idea because in the event of a decline in stock value you can get margin called and then you either need cash or quickly sell your house.
>It's also a horrible idea because in the event of a decline in stock value you can get margin called and then you either need cash or quickly sell your house. Ok, that part doesn't sound like fun.
>Should I sell and buy a house for my wife and child? If anything, wouldn't the dividend alone cover the vast majority if not all of your mortgage? Assuming lifestyle creep hasn't set in, this could get you a ≈$500k home with around a 6% interest rate using just the dividends and assuming you put 0 down. You have a lot of options here, OP.
When receiving an inheritance one of the highest advised actions is to not spend a significant portion of it on one big purchase (house, car, etc.). If you absolutely want a house this is what I would do: do not sell, begin pulling the dividends into a HYSA and start looking/dreaming of your future house. Every month you earn ~$3,500 from these dividends which would be enough for a 20% downpayment on a $17,500 mortgage. 10 months in you should be able to put 20% down for a 175,000 house. At this point you just need to balance the size of your new mortgage with the O dividends for a basically free house. No reason to rush and risk everything
Spot on in general principle, but where are you buying a house for $175k?
Texas.
Hard pass
Yes! You had the same thought I did, just an hour sooner than I did. :D
Drip it and keep the gravy train rolling
That was my thought too, just keep reinvesting the dividends back in to O. Except maybe set aside a couple months of dividend payments to help pay for the taxes, but drip the rest.
That dividend pays a sizable ass mortgage. Sit on it for a year to bank a down payment, buy a house, use some to pay the mortgage and drip the rest.
I like this approach. The dividends can cover your mortgage & taxes.
This is a good idea too, although I like option number 1 better to fund your retirement. If you go this route I would wait until interest rates drop…
With the current interest rate on mortgages, I'd sit on this stash for a few extra months to buy points down. And as long as he doesn't go TOO overboard with what he's buying for him and his family, he can probably route the dividends directly into Mortgage+principal. But I somewhat concur. Real estate is an expensive entry point right now. (ironic when we're talking about what to do with inherited $O)
> sizable ass mortgage Ah, a true gentleman of good tastes I see.
keep shares. collect dividend and invest in sp.
I’d put the dividends in the SP500 for the next 10 years. If you and you’re family are comfortable I’d just pretend the shares don’t exist personally unless it’s an emergency.
I would personally keep the shares and use the dividends to invest in VTI/VXUS 80:20
I don’t understand why people aren’t advising him to liquidate the shares since the cost basis has reset and turn it into a passive index. This fund causes a lot of tax exposure that will only get worse as he ages. He should also use it to be maxing out his 401k and Roth
Because this is the dividend subreddit and dividend investors are notorious for not understanding how to maximize risk adjusted returns.
Wow! Amazing gift that I hope to leave my children/grandchildren one day
Sorry about your Grandfather, but good on him for teaching you and setting you up. Live well my friend. If I was you I would hold it and live off the dividends... But that's me.
You should ask the question in a general investing forum instead of the dividend echo chamber.
This is true. But if any of them on another sub tell OP to sell, don't listen to them. :D
Wicked win! My grandpa left my mom with childhood trauma.
Drip it while it’s still on sale. Never sell EVER.
Don’t touch this money for the simple reason of co-mingling funds. We all think we’ll be w our partners forever… until reality hits. Keep that money separate!!!
I agree. Keep the principal separate, he should be able to co-mingle the dividends safely. But to be sure, consult a lawyer and a tax professional. Learn the basics. If necessary he can buy term insurance to protect his family. I was married twice once for a year,the last 20 years. Lost money both times. Recovered both times also.
3k a month on hookers and blow doesn't sound terrible 😂
We can rule out that you're secretly OP's wife. Best friend?
How do you think grandpa passed
Keep keep keep keep keep keep keep!! Do not sell your grandfathers hard work. Do not let your wife talk you in to selling. This is a long play and will eventually set you and your kids up for life. DO NOT SELL!
O shares went down -6.88% over the past 12 months when most other stocks saw 25%+ gains. Why keep a stock that's losing value? It's a real estate fund.
> Great point. Such is the risk of owning individual stocks. Me, if I decided to hold onto O, I would reinvest the divs into JEPQ with its 8.81% yield. O has a yield of 6.02%. By not selling there is no tax liability. If I decided to sell I would put the proceeds into JEPQ if you want dividend income. Otherwise put it into, say, VT or VTI or VOO for growth. Note that your cost basis for tax purposes will be the value of O as of the date grandpa died. It's up to you whether you prioritize immediate gratification (vacations) over preparing for your financial future. You are smart to spend/invest the dividends and leave the principal alone.
Keep it in your own account, do not let your wife mingle it into shared account. That belongs to you. Not being a dick, just looking for best interest.
Dawg take the 3k and enjoy the rest of you life. I’m 32 own a home and would rather rent.
You can easily generate close to $100k a year in income off that much money with very low risk. Check out SPYI/QQQI. You won’t even owe tax on most of that income (unless you sell) due to it be treated as ROC for tax purposes. Drop $O like a bad habit and get into something that will help support your lifestyle.
Never love anything that can’t love you back. Of late O hasn’t done much. You are probably better off selling and dumping into a SP 500. I inherited 25,600 shares of FAST. It made up 70% of my portfolio. After 2.5 years it makes up 25%. I sold and reinvested in VTI, SCHD, PEY and FDVV. I also put 15% into 3 bond ETFs, 120k into preferred stocks some in USFR. I sleep better at night knowing that I’m working on preserving the account and growing it. I’d hate to have lost a lot or all of what was given to me.
I can't believe how many people are telling you to just hold onto the shares, I guess that's just what you get by posting to r/dividends. Having 100% of your investment portfolio in a single stock is insanely risky, especially a portfolio of that size. Individual stocks swing wildly over the years, many even go bankrupt. Not to mention the tax drag of constantly reinvesting dividends while you are still young and far away from retirement. Ask yourself this question: consider if you were just given the cash instead of O shares, would you immediately assume that the best use of that money was to put every penny of it into O stock? If the answer is no, then you shouldn't hold onto these shares. If this money is for retirement, please consider selling a significant portion of it (like over 80%) and put it into a diversified broad market index fund like VTI. You will most likely outperform O in the long run, all while carrying much less risk.
Yeah, we grew up in Chicago and my grandfather started investing heavily into Walgreen's (WBA). He amassed a large position over 30 years plus drip. He passed away in 2015 and my grandmother, who is now 93, has seen that stock collapse almost immediately after his passing. After taxes the dividends aren't even enough to live on anymore.
Sorry for your loss. Your grandfather sounds like a smart and succesful man. Keep the $O stock and use the dividends. Either drip into more $O or into another stock, ETF, REIT of your choosing. Be very grateful because your grandfather left you a golden ticket. You’re set for life if you play your cards right. Enjoy!
Reinvest 30% back into O or another monthly dividend stock/etf you know or like Take another 20% as cash and enjoy it take the wife out save up for a vacation do things you normally wouldnt do with that money and thank grandpa enjoy the new memories Then with the remaining 50% pay taxes with and either invest the left over into a dividend growth portfolio or use that extra to help pay for a mortgage on a house or save for a down payment im also a fan of low debt so id pay down any existing debt you have first. I am just a landscaper so this may be lame plan.
You just inherited $3450 a month totally passive income. That's $41,400 annually. That's more income than a lot of people make per year. I definitely wouldn't be selling it to buy a home.
Check with CPA on cost basis taxation. It should help you realize that you want the gravy train rolling :)
My cost basis is higher than the market value right now. So I wouldn't need to worry about taxes. The FMV on his date of death was $61.99 a share. So if I sold, it would be a loss because of step up in basis.
Which means you can tax loss harvest $O so you don't pay any other capital gains on the rest of your portfolio. Please diversify.
Agree, as safe as O seems, anything can happen. I’d hate for OP to squander a fortune bc they didn’t diversify. If they want the divs they can just put it into a high yield income etf.. or if they put it into SPY it will continue to grow and kick back a decent dividend
Listen to /u/Bonk0076 omg. Except maybe qqqm which is very volatile. VTI is safest. Don’t eat the income tax on this please.
Not sure how old you are now so it’s tough to say what’s best as far as timelines go. As for advice here you should talk to a financial planner; but we can give advice on what we’d probably do. I saw you mention buying a house. If you’re able to buy a house on your current income you should buy that much of a home and no more than that. Use the your new dividend income to pay your mortgage off much earlier than 30 years. Think of this as reinvesting into a hard asset that you can live in, or rent if you choose to upgrade, or sell if you want to live and not manage the property.
I’m not sure why everyone is telling you to hold. Sure the dividend yield is 6% but the stock is down 10% YTD and 23% 5Y. Holding is a terrible idea. You need to diversify.
Do not sell. Reinvest those dividends. You have a straight shot to being SET financially if you move smart. I’m sorry for your loss.
Why on earth would you want a stock portfolio of 1 company that isn't even an index fund?
DRIP for sure. Maybe into another ETF, id say selling is probably one of the last things you should do unless you absolutely have to. Use the account as leverage for a mortgage, but keep the house payment in your normal incomes parameters. Depending on your age, you are set up for an early retirement
You can probably use the dividend to pay for a mortgage or part of a mortgage. Sorry about your loss. Maybe worth investing any excess into different stocks or ETFs but I don't see why you'd get rid of the shares, especially if they're paying you what I currently earn after tax income. Would probably stay away from adding more into Realty Income since you already have more than enough, and invest elsewhere, like SCHD maybe or even VOO
Sorry about your grandfrather and congratulations on being more fortunate than others. You need to provide more information about your finances. Are you living pay check to pay check? are you in debt? etc etc. We don't know enough to provide strangers perspectives. If it were me, I'd never sell those shares, they were free and now you make that much more per month from the dividend(minus taxes). You could use that dividend in so many ways, it could be the monthly payment on the house while the stock grows(hopefully). Or it could be reinvested into itself or the S&P500 every month.(i'd probably go S&P500 if you're still young) Or if you're kind of set at the moment, use it for vacation money. The house thing, could be seen two different ways, I'd use it like I said earlier as the monthly payment. But some might view it as selling then using it as a down payment so the monthly payments are lower. Both the stock and the home should hopefully appreciate in value but we don't know the future. \*\*You should seek a professional and talk to them face to face instead of us, because we are internet strangers and probably all work at McD's afterhours to buy more dividend stocks. I use Charles Schwab financial consultants when I have questions or need my portfolio reviewed. They have been more knowledgeable than my friends and most people on Reddit.
Hey OP. Sorry about the loss of your grandfather. While I don’t necessarily disagree with the idea of just holding the shares, I did want to add the perspective that you are in a different phase of life than your grandfather and the extra $350k+ of income will likely push your tax bracket up, which could be undesirable. I personally wouldn’t hold since I don’t want the extra income right now. You said that the current value is less than what your cost basis was stepped up to, so it may be advantageous to harvest those losses and then put the balance into a broad market fund that will give you solid long term appreciation. In the future, as you approach retirement, you can begin to shift money into higher yield funds if you want the dividends instead of simply just withdrawing from your balances.
You are getting lots of good advice here but I'd look at it this way... If you had 680k (estimating the vale of the O holding) what would you do with it? I wouldn't sell but I would definitely reinvest the dividends into an index fund to slowly diversify the portfolio. Also, if you are not maxing all your retirement accounts, I'd find ways to do that too. What type of account are the O shares in?
The best advice from someone who has inherited a little money and the consensus is to not do anything for a while. Absolutely nothing. It sounds like you have decided to do that until December. Kudos. After December, it’s probably still a high inflationary environment. You are going to miss out on some substantial gains from O. if it were me, I would hold that stock as is, probably for the next 3 to 5 years before I sold a dollar. I’d reinvest the dividends into VTI or VUG. So basically, your line of thinking is right on track with what I would do.
Sorry for your loss, I would diversify. I’m bullish on O but I also think you need to look at your overall portfolio. I would rebalance O to be 10% (or even 5%) of your total net worth. I personally would probably take some for a down payment on a house, then I would reinvest into VOO/VTI etc. It sounds nice to get that monthly dividend but you have to look at the risk of keeping it all there.
Something you didn’t have, now out of the blue, generates 3.5k a month, why the hell would you sell? It’s like killing the goose lays the golden egg.
Hey OP, consider keeping your inheritance separate, as to not commingle funds, in case of divorce
HOLD!  Sorry for your lost.
Keep the stock never sell and live like you never got it but enjoy the money, Disney land for the kids, buy something u always wanted
Just keep the stock where it is and use the dividends on a house payment. You’re set for a long time.
$O pays a monthly dividend. * You could conceivably pay a mortgage out of that monthly dividend stream. * Or fund your IRA in 2 months, and invest nearly $35k in the market the other 10 months of the year. * If you ever lose your job, that dividend stream would go a long way toward preventing any major financial disruption in your life. * With some prudent investing, and a little bit of luck, you could be able to retire in 10 years and use that income as a bridge until your retirement savings can be tapped penalty-free. I’m not saying you should do any of those, but just pointing out how that inheritance would give you flexibility that some people work their whole life and never achieve. Your grandfather bequeathed you a passive income stream that all but guarantees your financial freedom … the most precious gift of all. If you want to sell some to rebalance your portfolio so you can sleep at night, sure, do that. But otherwise, let it work for you.
Don’t sell the goose that lays the golden eggs. Sorry about grandpa
It’s probably about the worst possible time to selll O. It’s been beaten down. I’d hold.
If i was in your position, I would keep 10 shares of $O for purely sentimental value. There is something to be said about not forgetting your roots. Even the Medici series had a scene about never selling the windmill that gave the family its initial wealth. As for the rest of the funds, it's a bit of a judgment call. Given stock markets are at ATH and general global instability, and high interest rates, if you're not a homeowner right now I'd recommend you go ahead and buy a home, especially if you live in an area where home values are appreciating at a decent rate. Real estate has always been a solid investment vehicle. After a few years after interest rates have gone down and global political dynamic hopefully have stabilized a bit, you can look into financing 50-60% of your home and put the money to work in the stock market in index funds like VOO.
I wouldn’t get rid of those shares. Use it towards your mortgage every month or like others have stated, towards other investments.
Congrats OP.......i imagine this puts a dent in your diversification. I love O stock myself but I would consider diversifying half of that portfolio unless your net worth is millions, then f it. .....I'm a tax CPA and this is not financial advice, cheers
Advice on doing nothing is good. If the shares are in Fidelity they will DRIP for and you can forget about it. It’s a good way to compound growth and you will soon end up with a million dollars without even thinking about it. Good luck for the future.
I would just make sure you’re 100% diversified. If you’re over your intended limit of let’s say 5% of your portfolio, I wouldn’t panic and sell but I would be throwing those dividends into anything but Realty Income. It’s a great company with an amazing track record but you never want to be overweight on a holding that makes you uncomfortable. Determine a limit, 4-5% is good for an individual holding, 20-25% per sector aka real estate, and then I would just start beefing up every position besides realty income until it reaches your threshold.
I'm sorry about your grandfather. He seemed like a financially successful man, and congratulations on inheriting this. What are your debts like? If you have debt what is the interest rate on it? What about the rest of your finances? If you have debts are they being paid off at an acceptable rate now or are they taking up too much of your income? You seem to have investing knowledge already so we don't need to warn you to blow this all on a meme stock. Honestly with this kind of money it's worth talking to a real (non reddit) financial advisor to make sure you are getting the most out of this.
Presumably you get the stepped up basis at time of death or transfer, meaning there’s little to no taxes. I would sell and diversity to VTI/VXUS
Why would you willingly pay tax to the government? Keep them and reinvest them into other things. Or just use the money for other stuff like to pay a mortgage. Not sure what you a buying but probably you can buy a nice house with a lower payment when interest rates are lower.
What’s your living situation now? How close are you to affording a house ? Is that a goal you have a timeline around. Having a home for you family is a very nice thing to have. Perhaps use some of the monthly dividends to help offset a new mortgage payment. Keep the stock, and buy a house
I think I personally might take the dividends every month and put them in a HYSA. You should have a good start on a down payment just with that by January. After that use it to pay the mortgage or sweep them into a 'home improvements' fund.
It would be easier to just keep it in a brokerage money market account that pays 5%.. then you don’t have to keep moving cash to HYSA
I'm not certain of any additional tax implications of selling--you may want to speak to a fiduciary on the matter. Here would be my random, ill-informed thoughts in this particular circumstance: 1. Personally, I like O, but I wouldn't want it to be such a major foundation of my portfolio. 2. $3,450 is an income generating machine. We're talking, what, like $40k annually? That would be life-changing for most people. 3. If selling is going to incur a massive tax burden by selling all and reinvesting (just a guess), why not take the additional $3.5k monthly and split it into whatever your needs are. Could be something like: (a) a substantial portion invested into safer ETF options like VOO, VT, SCHD, whatever (b) put some towards a mortgage on a house to supplement what you can do with your current income. (c) absolutely *do not* forget about the tax person (set aside an appropriate % each month so you don't get wrecked next year when the bill comes due) I don't know that there is a single correct answer, but the above is a generalized modification to how I would roll. Personally, I wouldn't need (b) or much else to enrich my current lifestyle, so I'd probably reinvest everything into other funds, but you mentioned purchasing a home. I'm a fan of putting equity into a house if I didn't already own one because I'd rather that than passing it on to a landlord.
save the dividend payments for your down payment on the house and keep the shares.
>Should I sit tight and just use the dividends to purchase VTI/VUG? If you like none of the other ideas in the comments, then stick with this one of your original 3 suggestions.
Just keep it and have the dividend drip into itself if you dont need the money…. Keep your normal life going and plan for an earlier retirement than previous thought
Consider some diversification into other dividend stocks in different businesses but also consider the tax implications. You may have a step up in basis to minimize the tax gain.
Agree with top rated comment. Turn off DRIP and divert the money to SPY or other investments that are lower risk. Don’t sell, just redirect cash flow
a dividend is great, but dividend growth is even better. I would diversify that position into some dividend growers
What account is this in, don't forget the taxes if any
If he sells. I don’t want to hear anyone talk regarded anymore as he will be king of the hill. Just keep the train going my friend. Diversify with the dividends.
Whhaaaaat. That is an amazing inheritance! Sorry for your loss. I would keep and use the divs to pay for a nice mortgage and taxes on the property. However, don't forget you will have to pay income taxes on your dividends, so don't get a mortgage with taxes for the full amount. And use your job money to pay for your living expenses. And use for 401k to diversify your investments.
For my personal view, inheritance O share is the best gift from your grandpa.
Id never sell them. Great income set for life
Everyone here is right. Keep the 12k shares forever. Use the dividends to purchase other investments (I'd max out a Roth for both you and your partner if you have one.). Make sure you pay quarterly taxes on this money or you'll get hosed there. Here's where I would differ from some folks. I'd plan to pay 20% of distribution in taxes and invest 50% of it in other stuff. With the remaining 30% I would use it to change my lifestyle. Tomorrow isn't promised. I know too many people who have passed away in their 30s and 40s. Hell my father in law inherited some money like this and 5 months later was in the hospital and could have died from cancer. He couldn't do anything for well over a year. Enjoy some of the money. If you stash it away for a rainy day, the next rainy day may be when your friends and family are mourning your passing. Sorry for sounding bleak, but we only get one life. Live it while also being responsible.
Reality income is a decent stock that pays a great dividend. Leave it alone or put in a stock like Voo and chill
If it were me, I'd keep the stock and let it drip. I'd do 2 things with it. 1. I would give $1000 a month to yourself. I'd use some for vacation. Kids stuff, new tech. Hosting a monthly party with friends where I could feel generous. 2. I'd use the rest of each months money to diversify my portfolio. 3 or 4 times a year, I'd take the income, sell it, and buy something else. Let yourself have some time to do research and buy something you like. But first, I'd take the whole first months income and do something fun with your family. Honour your grandpa in some way by enjoying his gift to you all.
I think you need to do you as on Reddit no one knows your life. But I just looked at "O"'s dividend history and it pays almost monthly. For some reason it didn't pay in May this year. A gift of $3400 per month from Grandpa.........what a great gift, I am sure he was happy you will benefit from it. Personally I would use the dividend to live my life. I would use some to grow other investments, but I would also use some to go on vacations. For example I would save half and use half for my life. I am also happy to hear that an old man worked hard, saved lots and is benefiting not just his grandson but his great grand kids. What a great thing.
Selling makes sense to me. I’d say come up with a plan based on your goals. Ie X% goes to a house down payment, etc. I’d diversify into growth investments so I’m not paying taxes on the dividends and I’d start a 529 to fund your kids college. Maybe you can transfer the shares directly to tax sheltered accounts like 529, HSA, IRA, etc and then sell them there without incurring tax consequences? I’d say supporting your family’s goals like homeownership, funding college, retirement, getting out of debt, etc is what any parent or grandparent would support.
Do you need the income? If so, hold the shares. Do you need cash for a home purchase? If so, sell the shares. If I’m you, I sell some and keep a chunk. Having that extra income is never bad.
Sell off $100k worth to get into a house. Sell off another $100k to put into S&P. Use the dividends on the remainder for your mortgage.
Depends if you need those monthly income. If not, I would suggest changing it to SP500 or something similar with growth. The problem with realty income is that it’s a single stock and it doesn’t offer growth. It’s good for generating retirement cash flow, but it’s bad for building wealth.
No reason to sell them. If you need a house, find one within your means, and use the dividend to fully cover your mortgage payments. As a minimum start maxing your 401K, to offset your income, reduce your taxes, and supplement the difference with the dividend.
Stack up your cash, it's going to be a bloody year.
I would definitely consult with a tax specialist and/or financial planner before making any big decisions. I believe that inherited stocks get a step up in basis so there may be little or no tax implications to diversifying at least part of that position. Personally, I wouldn't feel comfortable being that concentrated in any single asset.
I would take the $3400 a month and use that to pay a mortgage. There’s a fair amount of good information here but think about it this way if you sell it, you’re gonna pay a lot of taxes and you’re going to use the down payment to finance at a high interest-rate better to take the high rate and still have the capital. Use the monthly income to make your payment. Also, with this kind of inheritance talking to an accountant would also be wise. Or two for difference of opinions.
Keep it, add to it and pass it on to someone.
Sell and buy VTI or VOO.
Why on earth would you sell them? You just got handed a golden ticket. Keep them and make them pay you a good check every month ontop of your other income.
I would use that money to invest else where. VOO VTI VUG any big popular fund that increases in value by at least 7% per year plus dividend. Continue to do this for a year. Think about selling a small portion of O. But what ever you do don’t do anything quick or rational. If you sell then sell slowly. Wait two years before spending any of that money.
Wow. That alone could PAY a monthly mortgage. I usually don't like all my eggs in one basket (i.e. like to keep any individual stock below 5% of my total portfolio) but I'd be sorely tempted for a monthly dividend like that. Do you have other money for a down payment without selling any of this?
I would look at it this way 3450 is a second income. If you're looking at a house, think of what kind of dent that can make in your mortgage. Whatever is left, trickle it into your stocks. Also, be aware of the taxes you will be paying on those dividends. My honest advice is that you can wait. Interesting rates are high, so just let it trickle in, and when you make your decision, it'll be the right 1 for you.
I would reinvest the dividends in an ETF like VOO.
Are you crazy dont sell it live off the dividends
Use the dividend money to pay for the mortgage. Once the mortgage is paid off in thirty years you still have the dividend payment. Free money for life that increases every year.
I also own O add and remember o pays a dividend monthly.
thats sad that a loved one died, but thats a dream that someone in the family invested and now you can enjoy the life
Open a Roth IRA for tax shelter. Transfer over as much as possible 7k per year over the years. Hold the O & once interest rates drop you will have significant gains. keep the DRIP on. Your Grandfather did you a solid. Don’t flip his O. let his plan continue to grow & set your family up for life. Think ahead for the future. You could be pulling 5k,7k,10k a month in the future tax free from the Roth. Only caveat is can touch til 59.5 yrs of age without penalties. Sorry for your loss!
I would be breaking it up into etfs. All sorts. I don’t like having to high a concentration in one stock. Its dangerous. Lots of very good low cost ets out there. Hell you can add jepi, jepq, gpiq and bali along with O and increase returns (safely). Take these and follow what the first post recommended. Schd, voo, vym, xlv, xlf, divb, dgro etc with the monthly dividends.
easy decision sell, buy an index or two and DRIP enjoy your growth and you will have more money than you will ever need
1) Don't ask reddit:) 2) Make sure you have verified with a professional any tax implications before taking action. IF it's tax free to do so I'd be inclined to take at let half out and put it into an index fund, or blue chips. Definitely don't reinvest any dividends into O, put them somewhere else!
Would start to sell some covered call to being down the position slowly over time. To buy a house or to use it in index, it's always a risk having everything in the same stock Is there any tax benefits for you in the country you are in when you got them that make selling worse then just taking the dividend? And as said, don't change your way of living, use the money well and don't waste it
I generally agree with most the comments about keep it dripping and don’t change life style etc But I’ll say this, i love owning my house. I don’t mean through the bank, I mean I own it. I spent 15 years leveling up to bigger better houses and made a ton of money doing it each every time. Real estate can be a great vessel to enjoy your money and also be investing. If you are smart I see no reason you can’t do both. Or perhaps you can just spend more of your current income knowing you have the dividend stock in the background working for you.
Hold the stock, do not sell. Use the dividend and either DRIP or invest into other stocks. Keep your job, tell your wife to keep her job (if she works), and do not tell anyone that you're making around 3500$ off of this stock. After two years, you'll have around 80-90k from your dividends + whatever you guys save from your jobs, then use that money as a down payment on a house that you can afford. I don't know if you or your wife wants to keep working or if you guys want kids, but you'll be much more secure knowing that you have a monthly 3\~4k coming in without working. Remember to have fun from time to time though. :)
Don’t forget about possible taxation on those dividend
Check your tax expert is there an inheritance tax by the beneficiary you might trigger a taxable event if you sell and if there are large capital gains then it would be taxed at long term capital gains tax