It's not unusual to be bequeathed shares as part of a loved one's deceased estate. However, when you consider that, according to the ASX's own 2017 study, only 31% of us own shares (this statistic excludes derivatives and our superannuation accounts), it can be a challenge knowing what to do with them. It's fair to say that the vast majority of these shares are passed down to many who have had no or limited interactions with the sharemarket.
What should you do with your shares?
For some, the first decisive act will be to cash out under all circumstances and tick that European tour or renovated kitchen off the bucket list. If you choose this path, be aware of the tax implications and if you are one of those people with limited exposure and understanding of the stock market, seek out a trusted accountant and broker to walk you through the process.
For others, like my Mum who faced this question a couple of years ago after Dad passed away, the question can be more fraught. He'd left her some shares in a couple of the classics: BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA).
Dad had held these shares for decades; he'd also inherited them himself, which added a kind of sentimental value to them and he would never sell them. All I can say to this is reiterate that we all have our own way of managing our investments and what works for us. In his defence, he got his comfortable retirement and he was otherwise meticulous in his retirement planning so that when he left us after 90 years at the crease, he knew that Mum would be taken care of.
The decision
Mum chose to hang on to those shares—I expect sentiment played a small role in her decision as well, so let's see how she's fared after two years.
Two years ago, CBA shares were selling at $81.25 and today they are trading at $82.24, with a fully franked dividend of $4.29 per share in 2017, $4.31 in 2018, and this year's interim dividend of $2.
During the same time period, BHP was selling at $21.25 in June 2017 and is now trading at $40.85, with fully franked dividends of $1.06 per share in 2017, $1.59 in 2018, and $2.19 this year.
On balance, you'd be very happy with the growth in the BHP share value, while CBA has stayed generally around the same mark. Income derived from both stocks via dividends is respectable. If it was my call, I'd hang on to both for as long as possible.
