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Short Term DGI - Plateauing Stocks - MrPosadas - 05-13-2021
New member but have been lurking in the shadows reading and learning from everyone for quite awhile. Used to work for Delta Air Lines but took their early retirement package after COVID and moved back West to be closer to family. Delta’s 401K allows me to trade in the open stock market so I do most of my trading in that account while also managing my ROTH and brokerage accounts.
One topic where I could use some advice is whether to hold or sale a high dividend yielding stock that has plateaued. The dividends are great but not sure if it would be more advantageous to sale in the near future and invest in something else that has more growth potential; or, if I should stay invested, accept not much more growth is possible, and collect dividends along the way.
RE: Short Term DGI - Plateauing Stocks - fenders53 - 05-13-2021
(05-13-2021, 12:19 PM)MrPosadas Wrote: New member but have been lurking in the shadows reading and learning from everyone for quite awhile. Used to work for Delta Air Lines but took their early retirement package after COVID and moved back West to be closer to family. Delta’s 401K allows me to trade in the open stock market so I do most of my trading in that account while also managing my ROTH and brokerage accounts.Welcome to the forum. I assume you may be talking about stocks other than DAL? I'd run it through the list, and some of this is definitely just my personal experience.
One topic where I could use some advice is whether to hold or sale a high dividend yielding stock that has plateaued. The dividends are great but not sure if it would be more advantageous to sale in the near future and invest in something else that has more growth potential; or, if I should stay invested, accept not much more growth is possible, and collect dividends along the way.
-sounds like generating taxes from gains are not an issue?
-don't overthink this and create reasons to sell based on short -term issues. It's VERY easy to do.
-is the stock way overvalued and the growth has been gone for years with no end in sight? Time to sell.
-If you sell do it in stages. The chances of timing is right isn't that good.
-You need a better place to put the money or you are just churning your account.
It's OK if all your port isn't exciting, but being overweight if you know it no longer makes sense isn't good investing. Buy and hold everything until the end of time is just as mindless as flipping stocks for no reason. I've done both.
I look forward to your future posts.
RE: Short Term DGI - Plateauing Stocks - ChadR - 05-13-2021
I also agree with Fenders. If you don't have a better stock to invest the proceeds in, keep the stock and have the dividend keep coming into your account. Don't churn your account just to churn your account. Is the plateau a short term issue or is it going to be stuck there for a while. Back a few years ago, everyone was saying that MCD plateaued at $90/share and wouldn't go any higher because the younger generation wasn't eating there and it would just be a stock that didn't move and would just keep paying out dividends. Today it is up to $230/share. Glad I didn't sell my shares on a short term plateau.
RE: Short Term DGI - Plateauing Stocks - EricL - 05-13-2021
(05-13-2021, 02:10 PM)ChadR Wrote: I also agree with Fenders. If you don't have a better stock to invest the proceeds in, keep the stock and have the dividend keep coming into your account. Don't churn your account just to churn your account. Is the plateau a short term issue or is it going to be stuck there for a while. Back a few years ago, everyone was saying that MCD plateaued at $90/share and wouldn't go any higher because the younger generation wasn't eating there and it would just be a stock that didn't move and would just keep paying out dividends. Today it is up to $230/share. Glad I didn't sell my shares on a short term plateau.
I agree with those thoughts. Unless you have better ideas it's generally not a good idea to dump something simply because its price growth has stagnated.
ABT was dead money from 2013 to 2016 before tripling in price.
MSFT was dead money from 2002-2010 before going up 10X in price.
Business growth goes in cycles and rarely in a steady straight line.
RE: Short Term DGI - Plateauing Stocks - fenders53 - 05-13-2021
DE is a good example as well. I know exactly no one that predicted a run like that. They were laying workers off shortly before Covid.
Your description of plateau would be helpful.
RE: Short Term DGI - Plateauing Stocks - NilesMike - 05-13-2021
(05-13-2021, 08:34 PM)fenders53 Wrote: DE is a good example as well. I know exactly no one that predicted a run like that. They were laying workers off shortly before Covid.
Your description of plateau would be helpful.
The only "tell" for me was that DE was around its normal dividend yield leading into Covid. Now, its yield as all time low. For me, that would be a time to really lighten up the position and buy something else that is better valued and has room to the upside.
RE: Short Term DGI - Plateauing Stocks - fenders53 - 05-13-2021
Agreed. I am not a big fan of cyclicals as core DGI holdings in the first place. If I owned DE I would be trimming before I thought their industry peaked for this cycle. Now before somebody starts typing I know there are numerous exceptions. Buying a cyclical before it becomes a behemoth can a great investment.
RE: Short Term DGI - Plateauing Stocks - crimsonghost747 - 05-13-2021
It all depends on your personal situation and your goals. High dividend income, even if it comes with low growth prospects, is certainly not a bad thing to have when you are in your retirement years. I would be super comfortable having a stock like that in my portfolio during retirement as long as the dividend is safe.
There is also the consideration that valuations in general are pretty high, so now might not be the best thing to let go of a stable asset and put the money into a speculative one. Then again that is just my view on the current situation.
RE: Short Term DGI - Plateauing Stocks - EricL - 05-13-2021
(05-13-2021, 08:34 PM)fenders53 Wrote: DE is a good example as well. I know exactly no one that predicted a run like that. They were laying workers off shortly before Covid.
Your description of plateau would be helpful.
Ugh, don't remind me of that one.
Now up 330% since I sold in August of 2016 for "better" ideas.
It would now be the biggest position in my portfolio had I not sold...
RE: Short Term DGI - Plateauing Stocks - fenders53 - 05-14-2021
I am waiting for the O.P. to come back and tell us he owns too much DAL. If so I am modifying my advice. I don't know what their current dividend situation is so probably not.
RE: Short Term DGI - Plateauing Stocks - ken-do-nim - 05-14-2021
(05-13-2021, 11:27 PM)EricL Wrote:(05-13-2021, 08:34 PM)fenders53 Wrote: DE is a good example as well. I know exactly no one that predicted a run like that. They were laying workers off shortly before Covid.
Your description of plateau would be helpful.
Ugh, don't remind me of that one.
Now up 330% since I sold in August of 2016 for "better" ideas.
It would now be the biggest position in my portfolio had I not sold...
My 2015-2016 ROTH portfolio consisted of Amazon, Netflix, Tesla, among others ... so yeah, I hear you!
Short Term DGI - Plateauing Stocks - MrPosadas - 05-14-2021
Really appreciate everyone’s perspective in regards to my question. Was on the verge of selling but some strong arguments were made to hold so that’s my game plan going forward.
The only stock restriction in my 401K is actually DAL stock. I can buy any other airline stock or ETF but DAL is off limits for some reason. I’ve been dabbling in airline stock and have done well. Been focusing more on domestic leisure based outfits though because larger airlines like Delta depend so much on business class and international bookings that it’s going to be a while before they begin to resemble their pre-COVID profit margins.
I am good about cost averaging down but admittedly have an itchy trigger finger when it comes time to sell and often dump everything in one fail swoop. Not sure why because the logic of cost averaging down holds water in the other direction as well.
Again, thanks your inputs. I’m not as experienced as y’all but will contribute here and there in the forum when I feel I can add value. Thanks!