Every now and again you wind up getting what you pay for and there’s no such thing as a free lunch. I probably came to this realization last summer when I ensured that even my smallest holding on the Loyal3 platform had greater than a fractional share. So the news this week of their migration to FolioFirst was no big surprise. The issue I have with FolioFirst is the $5 monthly fee. So transferring my holdings becomes priority one. In fact Dividend Growth Investor lays out the options fairly succinctly in his post.
Early on, my strategy with Loyal3 was twofold:
- Move three horses to the platform to generate enough dividends to play with. This was accomplished with PEP, AAPL and SBUX.
- Build a group of speculative holdings (less than 1% portfolio weighting) via dividends generated by the first goal.
The free trades with Loyal3 accelerated this process. Today I’m faced with a (slight) strategy shift.
An order was placed this morning to sell Unilever (UL) and L Brands (LB). Unilever due to taking profits off the table and for a sense of protection from a potential single headquarter location and the possible corresponding tax implications. L Brands due to uncertainty with their ability to maintain comps while the malls where their stores are located appear to be imploding. I’ll use this as a tax loss against UL and the required fractional share sales.
My remaining Loyal3 full share holdings (YUM, YUMC, AAPL, K, SBUX, HAS, DIS, SQ, PEP, KO and AMC) will be moved … Loyal3 will not move fractionals which will need to be sold. My goal is to have the transfer complete prior to May 1st which is the ex-div date for the next payer, Hasbro. I can then sell any remaining fractionals, wait for YUM’s dividend to post (May 5th, went ex-div April 14th), then move any cash into my bank.
My default approach will be to consolidate the holdings into my existing brokerage account which provides the alternative to reinvest dividends. I will, however, meet with TD Ameritrade today as they (via phone conversations) have indicated they perform OTC ‘grey market’ trades with no surcharge. As Schwab charges a $50 surcharge, this may clinch the deal for AMTD.
So any Loyal3 strategy shifts in your future?
Update: 20 Apr 2017 – UL and LB sold, decision finalized on move of remaining to existing Schwab account. AMTD has no set ‘grey market’ policy but will normally adjust the fee. Lack of certainty killed this option.