re: Is there any downside to loaning shares out?
There's some risk, yes. Your Broker will state those very clearly..... But then again, there's some risk just walking down the street!
In the nearly 4 years I've participated, I've experienced zero issues. I imagine if one is lending out shares of an obscure, or thinly traded, or johnny-come-lately stock, CEF or ETF, the risk factor may be higher. (I don't own anything like that. All my 45 Holdings, including my BDCs, CEFs & ETFs, are reasonably well known and been around a long time.) The only shares that have been lent out from my accounts have been limited to BDCs, CEFs & ETFs. I've NEVER had a classic DGI stock (ABBV, LMT, MO, PG, UTG, VICI, etc) or even a Growth stock (MSFT, NVDA, etc.) loaned out.
I would strongly suggest limiting participation to an IRA or Roth account, to avoid collecting Misc. Income rather than Qualified Dividends or LT Cap Gain Distributions. I only lend out shares from my IRA & Roth.
Every Broker handles displaying the details differently. I can only speak for E*Trade. While the Accrued Interest Income is displayed daily in a separate window, the daily transactions (shares loaned, collateral amount, Interest Pct, etc.) are lumped onto my Transactions Window..... Thus, that page can become quite cluttered. (Some here have expressed all that clutter was enough to turn them away from participating.)
With the above in mind, appreciate that the shares loaned out will change Daily, as will the collateral amount & Interest Pct.
The Accrued Interest is credited to my IRA & Roth accounts on or about the 4th Business Day of the following month they were earned. I.E. I expect to see Oct's Accrued Interest posted in my E*Trade accounts tomorrow.
Usually it's all or none of an Account's Holdings are available to be lent out. E*Trade does not allow us to pick & choose which holdings within an account are eligible.
Finally, you won't get rich, but you will collect some Extra Income. How much is entirely dependent upon your Holdings. It may add up to 4 figures a year...... Which is always Welcome in my Retirement Portfolio! :-)
Good Luck & Happy Investing with whatever you decide. |
