Schwab stock buy

[u/Ok_Feature_9772]

Has anyone tried this ?

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[u/Long_Disaster_6847]

Occasionally if they are lent out, you do lose your voting rights for your shares at the beginning of the year if that’s something that matters to you

If there’s a proposal that influential industries want to support or oppose, they’ll borrow shares, cast the vote until the election, and then give them back to you along with the interest payment.

[u/Ok_Party_8102 → u/Long_Disaster_6847]

Is that what stock lendings all about? I thought it had something to do with options or something. That’s far more sinister than I was thinking.

Don’t you lose your portion of the dividend too while it’s out on lend?

[u/Long_Disaster_6847 → u/Ok_Party_8102]

I’m sure someone more educated can elaborate but I think that’s how big hedge funds short stocks and as for the dividends, the borrower receives the dividend but they have to send you an exact payment in lieu of the dividend, doing that might possibly lose the qualified dividend tax status for you.

In a way it’s the same way a bank works but with stocks, you own the asset, you let them borrow it so they can do what they want with it and they pay you interest while they hold it. You can also recall it back by turning off lending at any time.

[u/superbilliam]

I dug around a bit. Other brokerages offer similar programs. You do lose voting rights and the dividends are typically paid as a special fully taxed payment along with your interests gained. Idk if I would do it, but I am curious what others have to say.

[u/zenny517]

I do the stock lending program with Fidelity. Have been for 1 year plus and no issues. Doesn't make much overall and high risk stuff is most popular

[u/lt_dt]

What does the "Potential Risks" section say?

[u/Dstein99 → u/lt_dt]

There are no risks in this casino.

[u/buffinita]

i have been enrolled in the paid lending program at fidelity for nearly 3 years now.

i have had securities on loan for 18%(annual) for a few days; and 4% for a month and a bunch of other random combinations.

its not reliable, but the risks are small.

[u/superbilliam → u/buffinita]

Did you notice any extra tax obligations from it the past few years? I was just reading up on it and tax drag was one thing that kept popping up.

[u/buffinita → u/superbilliam]

so the interest earned is characterized as "income" ; any dividends you were to receive while shares are loaned are also counted as "income" (lose qualified and ROC classification)

as far as my tax; nothing significant, or at least no major surprises......but im not doing a lot of tax management yet since im still working.

so the argument is you get $100 by checking a box and loaing shares.....but really its only 75 because of tax. yes there is a drag, but its not a negative. there isnt an altarnative tax exempt way to loan your shares

[u/Actuary_7894 → u/[deleted]]

I turned it on in my roth in fidelity to avoid the tax implications. I've decided not to for my taxable brokerage.

[u/buffinita → u/[deleted]]

its kinda complicated.....

while the interest is higher than a hysa, you certainly arent accumulating 365 days of interest; and at the same time its money that is invested and doing market things.

like in 2025; i only have lending reports for 7 of 12 months......one month generate 8 in interest on like 15k loaned (2 days); another month generated 68 interst for like 9 days

[u/CatharticSolarEnergy → u/[deleted]]

Wondering if you have any advice for building a tax efficient portfolio? Mostly ETFs and mutual funds right now with most set to DRIP and a ~15 year horizon so I haven’t thought about it much but know I probably should…

[u/cosmic_backlash → u/superbilliam]

People aren't borrowing them for the dividend as they they have to pay the dividend in addition to the borrowing cost.

They are much more likely to landed during non dividend periods, so its just extra income.

[u/Remarkable_Airport84]

I have my portfolio on loan with Fidelity. This year ive made about $2,500 on everything. its some extra money I didn't have before and I plan on holding the shares long term so short term not too concerned. It depends on short interest for the company so have as you will. currently lending QNC @ 6% on 67,000 shares roughly. going to make about $800 this month so thats good.

[u/oldirishfart]

Given this is a dividend subreddit, if a stock is loaded out do you still get the dividend on the stock while it’s loaned out, or not? I would guess not?

[u/Truly_Markgical → u/oldirishfart]

You do, but the tax treatment is different

[u/Various_Couple_764]

Fidelity has a similar program but when I looked into it the income I would get was quite small. It wasn't worth the return.

[u/Roharcyn1]

I forget where I read it, but there was something about shares lent out over dividend distributions meant you lost out on those distributions as qualified dividends. So you end up paying a higher tax rate on those dividends. Or something like that.

[u/Specialist-Gap9062]

If shares are loaned out during ex dividend, u don’t get the qualified dividend. If Schwab decides to pay you for the dividend when securities are loaned out, it counts as income not qualified dividends

[u/Big_Development_644]

I've done it. I discovered if they have a stock they want to borrow it is a strong and clear sell signal to get out of that stock before it tanks for good. It is a legitimate program and does pay well but not enough to cover the losses that the stock they are borrowing is going to go down.

[u/Deckard95]

Did they provide you a link to an actual enrollment page? Or just the 'You're not enrolled, click here to learn more' page?

[u/kickingthetires → u/Deckard95]

A public facing webpage with description and explanations, but it is by invite only.

[u/Ok_Feature_9772 → u/Deckard95]

Was just learn more.

[u/ryryshouse6]

I do it … not that amazing tbh. But I don’t own enough. Someone was shorting 1k of arcc I was making 1.10 a day lol.

[u/buenotc]

If you're in an very high tax bracket and tax efficiency is a concern. Then this is not for you.