<THE DRIP PORTFOLIO>
If and when the time comes
by Vince Hanks (TMFElwood)
NORTHVILLE, MI (June 1, 1999) -- The Drip portfolio is in its infancy -- creeping along slowly, coordinating movements to set the foundation for healthy development. At this stage, selling a holding is the last thing on our minds. It may be twenty years before we face a sell decision, if that soon.
Despite that, I'm going to discuss some of the elements of selling Drips today. It's pretty straightforward, so it won't take long.
One of the disadvantages Fools point to regarding Drips is the inability to sell in a timely manner. Hopefully, after several years of a Dripping, a drip here and a drop there will eventually add up to a small ocean and expeditious liquidation will not be a priority. Still, when the time does come it's a good idea to consider the best avenue for your sale.
There are essentially two ways to sell shares acquired in a Drip. Perhaps the easiest is to sell through the plan itself by notifying the transfer agent you'd like to sell all or a portion of your share balance. In most cases, the sale will occur within twenty-four hours of your written request. Many companies also allow sales requests by telephone, often completing the transaction the same day during trading hours. It will usually take 7-10 days to receive proceeds from the sale.
There very often is a sales fee involved when selling through the plan; you'll want to be aware of the sales fee first, naturally.
The other method is to request a certificate for all or a portion of shares held from the transfer agent and then deposit the shares in a brokerage account, or use a broker to sell them for you. While there usually will not be a fee for acquiring the shares from the transfer agent, normal brokerage commissions will be incurred.
If the share balance requested includes partial shares, you will receive a check along with the certificates for those fractional shares.
In the event that you are holding some certificates in your possession (usually those required to initiate a Drip) and plan to sell your entire position through the transfer agent, some advance planning can save you some money.
If the plan accepts safekeeping of shares, simply send them to the transfer agent a few weeks before the anticipated sale date. If the plan does not offer safekeeping, then requesting the certificates and using a broker will likely be the best course of action. This will avoid paying commissions on both the shares held by you and those held by the transfer agent.
Though many of us may not be selling for years, it's good to know what to do when the time comes. A little foresight and planning ahead will make the whole process just that much easier.
Have a Foolish evening!
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