Inherited Shares - what to do??

korec

I'm looking for some advice. I've recently inherited approximately 10,500 FBD shares from a relative and I'm wondering what my best next steps should be. To begin with I'm not very informed on this topic(possible investments nor shares) so please forgive my ignorance. Would I be better moving these shares or holding tight with them until maybe their price goes up? At present I have no personal debt nor am I a homeowner. And even though my career is construction related I still have a job in that industry. However I do intend to return to education to complete a masters in that area in September, though I feel I will not be dependent on other supplementary income as I should I have enough in personal savings to cover me for the nine months I won't be working.

So any ideas on what would be the optimum way to utilise these shares to their maximum benefit?

soddy1979

I would advise you to speak to an independent financial advisor. However, the reality is that you are exposed to a serious amount of diversifiable risk with this position, so you need to reduce this.

Look at investing in something with low volatility until you decide what to do. Likely, this will involve multiple asset classes including bonds, equities, commodities, property funds and have them diversified geographically.

Raskolnikov

You need to be aware that you may be liable for CAT - http://www.revenue.ie/en/tax/cat/thresholds.html First thing first, you should assess your tax liability and pay that before you do anything. After that, you need to consider do you want to keep the shares or sell them. It might be worth keeping in mind that FBD pay an annual dividend that will be worth about €3.5k to you - http://lt.hemscott.com/SSB/tiles/company-data/financial-data/dividends.jsp?epic=EG7&market=ISE Perhaps you could combine this income with part-time work to fund your education?

korec

Thanks both of you for your advice. I have already paid the tax liability on them as I inherited them 3 months ago. Just wondering how you came to the figure of 3.5k annual dividend. My Uncle(the person I inherited them from) told me he received less than 1k dividends last year and I think he said the year before was similar. I'm sorry don't really understand the figures in the link you attached. Again its not really a field I have any experience or know how so forgive me for my ignorance.

With regards to funding for my education its not something I'm really dependent on as I have personal savings that should cover me for the interim period. At the moment I'm just feeling out ways that could maximize the benefits of it. I'm in no hurry to do something with it but at the same time I would like to assess my options and make sure I make wise movements and not just let it sit there (unless of course that would indeed turn out to be the best move). From its share price history I see it has devalued a considerable amount over the last few years.

coylemj

korec wrote: »

Just wondering how you came to the figure of 3.5k annual dividend. My Uncle(the person I inherited them from) told me he received less than 1k dividends last year and I think he said the year before was similar. I'm sorry don't really understand the figures in the link you attached. Again its not really a field I have any experience or know how so forgive me for my ignorance.

Your late uncle was wrong, FBD paid 30c in the 2010 tax year and will pay c. 36c per share dividend in 2012, see their (slightly out of date) data here.

http://www.fbdgroup.com/shareholder-services/shareholder-dividends/

They pay two dividends each year as you'll see from the data at the link above, maybe your uncle was only talking about the interim dividend paid in October 2010 which was 10c per share and which would have been paid to him as €1,050 gross.

If you study the data at the link you got from Raskolnikov, you can see that the forecast dividend for 2012 is in the range 36-38c, this is indicated in the bar graph at the top of the screen and as the number 37.48 in the table at the bottom of the screen.

While we're talking about dividends, they are paid net of Dividend Witholding Tax (DWT) which is currently 20%.

korec wrote: »

From its share price history I see it has devalued a considerable amount over the last few years.

Correct, it has been as high as €40 but that was at the height of the boom when they were investing in property in Spain and over optimistic valuations were clocked up as profit. However they have managed to weather the storm (i.e. didn't go out of business), have written down the valuations and taken a hit on the bottom line over the past few years, that's what brought the share price down to earth but since April 2009 the share price has stayed in the range 6-8 euros.

The consensus is that there are no more suprises (i.e. bad news) hidden in the balance sheet, hence the relatively stable share price and I personally regard them as a good performing stock, they are paying a decent dividend yield of 5.5% (the projected dividend 36c expressed as a % of the current share price 6.50) and have some upside on the share price which should provide for capital growth. In other words a 'hold' i.e. if you have them, hold on to them.