+- Dividend Growth Forum (http://DividendGrowthForum.com)
+-- Forum: Dividend Growth Investing (http://DividendGrowthForum.com/forumdisplay.php?fid=15)
+--- Forum: Dividend Growth Investing (http://DividendGrowthForum.com/forumdisplay.php?fid=33)
+--- Thread: Selling losers?? (/showthread.php?tid=365)
Selling losers?? - Robandcindy2 - 01-24-2014
As a follow up to this excellent thread:
Selling to lock in gains
What do you use to determine when to sell a stock losing YOU money?
I can rationalize some oil/energy stocks being down in value right now.
I can grasp my REITs being down as the investment world comes to grips with QE.
But I do have shares in some companies that are down quite a bit for no other reason than "Wall Street ain't happy with them."
Do I sell and lock in the loss forever or wait it out? In several cases I admit I own the stock because it BELONGS in a DGI portfolio but unlike Mr. Magellan Fund I only know about the company by what I can read on the net...(...buy what you know...)
Right now the only triggers I have are a cut in the dividend, a rapidly rising dividend, and an inability to afford the dividend payment.
What do you use...?
RE: Selling losers?? - EricL - 01-24-2014
(01-24-2014, 09:53 PM)Robandcindy2 Wrote: As a follow up to this excellent thread:
Selling to lock in gains
What do you use to determine when to sell a stock losing YOU money?
I can rationalize some oil/energy stocks being down in value right now.
I can grasp my REITs being down as the investment world comes to grips with QE.
But I do have shares in some companies that are down quite a bit for no other reason than "Wall Street ain't happy with them."
Do I sell and lock in the loss forever or wait it out? In several cases I admit I own the stock because it BELONGS in a DGI portfolio but unlike Mr. Magellan Fund I only know about the company by what I can read on the net...(...buy what you know...)
Right now the only triggers I have are a cut in the dividend, a rapidly rising dividend, and an inability to afford the dividend payment.
What do you use...?
I only sell if I think I made a mistake in my original due diligence, if fundamentals have changed, or if the company cuts the dividend.
If a stock has fallen you really don't have any losses unless you sell. If you invested for the dividend income that is what you should concentrate on. Sometimes you can take advantage of Mr. Market's scorn and add to your position when its cheap. Some recent examples for me have been DE, PM, DLR and IBM.
Some of my recent sells include INTC (frozen dividend rate), MMM (overvalued) and VVC (dividend growth too low).
I don't think its wrong to cut bait if you have better options available but I don't think price alone is a reason to sell.
What stocks are you worried about?
RE: Selling losers?? - Dividend Watcher - 01-25-2014
(01-24-2014, 09:53 PM)Robandcindy2 Wrote: I can rationalize some oil/energy stocks being down in value right now.
I can grasp my REITs being down as the investment world comes to grips with QE.
But I do have shares in some companies that are down quite a bit for no other reason than "Wall Street ain't happy with them."
Do I sell and lock in the loss forever or wait it out? In several cases I admit I own the stock because it BELONGS in a DGI portfolio but unlike Mr. Magellan Fund I only know about the company by what I can read on the net...(...buy what you know...)
Rob, if you can rationalize the first two, why not the third? To me, if you've chosen well and confident that earnings will continue and the dividend will continue to increase (maybe not as much as you want right now for either), then just because Mr. Market is punishing a company for whatever reason is no reason to sell. That only locks in your loss.
Now, if you way overpaid and now you realize it, perhaps it would be wise to get out and wait for it to come back to some reasonable valuation. If it's something that can be made up with a couple more years of growth under it's belt, then maybe patience would be the better virtue.
I think Warren Buffet, Peter Lynch and Benjamin Graham all mentioned on more than one occasion that they've sometimes waited several years for Mr. Market to recognize the value in a company. For me, I take it as a given that any stock I buy is going to drop for a while before I'm in the black. If it goes up right away, it's a bonus.
(01-24-2014, 09:53 PM)Robandcindy2 Wrote: Right now the only triggers I have are a cut in the dividend, a rapidly rising dividend, and an inability to afford the dividend payment.
What do you use...?
Rapidly rising dividend? I would think that would be good unless the payout ratio become excessive.
I use:
* Cutting the dividend. Freezes are OK if there's something management is open about and has a plan; e.g., INTC is still frozen but they're in the middle of a big research & refocus of the business although my patience is getting shorter.
* Way overvalued AND there's a good alternative available that improves the portfolio (yield or diversity). Usually this is more a trim than complete sell unless the position is small.
* Something's changed in the business and earnings aren't growing. This is a longer term watching. Again, you have to see what management says about it.
Over the last few years, I've become more sensitive to the income stream than pricing for stocks I already own.
RE: Selling losers?? - mjs_28s - 01-26-2014
In addition to the apparent "frozen" INTC dividend - they don't have a history or regular dividend increases. They are sometimes 4 quarters, sometimes sooner than that, other times longer than that.
Ever since I have seen people being concerned about INTC missing a dividend increase I have been confused as it seems to indicate that people don't actually know INTC's dividend payment history. This started with Seeking Alpha's website.
Here is a small sample of INTCs dividend history:
Aug 2012 to March 2014 - 7 dividends without increase
Aug 2011 to Aug 2012 - 4 dividends before increase
Feb 2011 to Aug 2012 - 2 dividends before increase
Feb 2010 to Feb 2011 - 4 dividends before increase
May 2008 to Feb 2011 - 7 dividends before increase
Feb 2008 to May 2008 - 1 dividend before increase
Jan 2007 to Feb 2008 - 4 dividends before increase
Jan 2006 to Jan 2008 - 4 dividends before increase
Jan 2006 to Jan 2007 - 4 dividends before increase
Jan 2005 to Jan 2006 - 4 dividends before increase
Jan 2004 to Jan 2005 - 4 dividends before increase
Jul 2000 to Jan 2004 - 14 dividends before increase
Mar 99 to Mar 2000 - 5 dividends before increase
Sep 98 to Jan 2009 - 2 dividends before increase
INTC does pay a dividend and I think that the dividend payment makes people assume that it has a history of annual increases which....it sometimes does. The dividend income over time is pretty nice so I personally do not care that it does not happen every year. That said, I do write calls on it every month as well so I scrape income from it constantly.
As Dividend Watcher point out in his closing "Something's changed in the business and earnings aren't growing. This is a longer term watching. Again, you have to see what management says about it." is what one should really watch. Annual income growth is nice too, but INTC is only one stock of hopefully many that people own so a few stocks going 5, 6, 7 quarters without a dividend increase is nothing to worry about. The fundamentals will tell you if you need to worry, trim, add, or exit.
RE: Selling losers?? - Robandcindy2 - 01-26-2014
(01-24-2014, 11:28 PM)EricL Wrote: [quote='Robandcindy2' pid='1977' dateline='1390618400']
What stocks are you worried about?
Hey Eric,
Worried might be too strong a word. Perplexed is closer. CSCO, PM, ED are at the top of my "what the heck are they doing now?" list.
ED a rock solid Ute in a major metropolitan area and a strong dividend history (I suspect it's a victim of fleeing Utes for bonds).
PM, international, big business, even recommended by a conservative advisor.
CSCO...they are everywhere. Like IBM, it just seems that the street isn't happy...
When I try to teach the kids about this they'll tell you one of my favorite sayings is "stocks go up, stocks go down, but good companies will be around for a long time. Usually best to buy and hold...."
Just wondering what I "due diligenced" incorrectly...
Rob
RE: Selling losers?? - EricL - 01-26-2014
(01-26-2014, 12:42 PM)Robandcindy2 Wrote:(01-24-2014, 11:28 PM)EricL Wrote: [quote='Robandcindy2' pid='1977' dateline='1390618400']
What stocks are you worried about?
Hey Eric,
Worried might be too strong a word. Perplexed is closer. CSCO, PM, ED are at the top of my "what the heck are they doing now?" list.
ED a rock solid Ute in a major metropolitan area and a strong dividend history (I suspect it's a victim of fleeing Utes for bonds).
PM, international, big business, even recommended by a conservative advisor.
CSCO...they are everywhere. Like IBM, it just seems that the street isn't happy...
When I try to teach the kids about this they'll tell you one of my favorite sayings is "stocks go up, stocks go down, but good companies will be around for a long time. Usually best to buy and hold...."
Just wondering what I "due diligenced" incorrectly...
Rob
I own PM and am not worried about that one. I think currency issues are their biggest headache right now since all of their business is outside of the US. I think you can expect 8-10% earnings and dividend growth like clockwork, which is pretty awesome for a higher yield company.
CSCO is one I've had an eye on and like the valuation on it but I haven't bought. Can't complain with the yield and growth at just an 11.5 PE.
ED has a nice yield but that's about it. Have grown dividend at just 1% per year over last 5 years. Similar to VVC that I recently sold for the same reasons. I'm not familiar with ED's growth prospects however, maybe there is something that makes it attractive that I'm not aware of.
My 2c worth.
RE: Selling losers?? - Robandcindy2 - 01-26-2014
The Case Against Selling In The Wake Of A Dividend Freeze
Over at SA there is this interesting article.
Good discussion going on. I particularly found David Crosetti's and "Chowder's" comments enlightening (as I always tend to do....).
[/quote]
I own PM and am not worried about that one. I think currency issues are their biggest headache right now since all of their business is outside of the US. I think you can expect 8-10% earnings and dividend growth like clockwork, which is pretty awesome for a higher yield company.
CSCO is one I've had an eye on and like the valuation on it but I haven't bought. Can't complain with the yield and growth at just an 11.5 PE.
ED has a nice yield but that's about it. Have grown dividend at just 1% per year over last 5 years. Similar to VVC that I recently sold for the same reasons. I'm not familiar with ED's growth prospects however, maybe there is something that makes it attractive that I'm not aware of.
My 2c worth.
[/quote]
I agree. Not sure about ED. I have Utes for stable (Widows and Orphans income purposes. Really had ED wrapped up as one I didn't need to worry about. It will sort itself out....
RE: Selling losers?? - Dividend Watcher - 01-26-2014
Rob,
I think you may be thinking too short term of PM's prospects. Not only are you facing the currency issue but the anti-smoking zealots are just starting to get wound up internationally. PM will adjust as it goes along -- it's been there before as part of MO
ED is probably suffering from several factors. Dealing with the NYS Public Service Commission is particularly tough for quite a while now. People are fed up with high utility prices and taxes in NYS. Part of the problem with utility pricing is the hidden taxes the state shoves down their throats.
Secondly, ED is hindered in their flexibility. There are no large transmission lines being built into the city so their ability to "shop" cheaper merchant supplies are limited. Here in upstate we suffer from a glut of excess capacity but there's just no way to get it there. The NIMBY's have tied up all the efforts.
Next is 9/11 which interrupted their distribution network. Then add hurricane Irene in 2011 and Sandy in 2012. They can't get a break for reacting to large disasters plus the reliability asurances being demanded of them as a result.
CSCO? There's been a lot of speculation in the trade rags about how much "cooperation" they've given the NSA. Security-minded organizations have given pause at purchasing their advanced networking products (where CSCO makes the big money) for fear they've given the NSA big back doors. No sure what effect that's had on the bottom line but it is mentioned often enough.
Just my own reckoning and none of it may be applicable.
BTW, thanks for the INTC div schedule. I knew it was variable just didn't realize it was so random.
RE: Selling losers?? - Kerim - 01-26-2014
I sell rarely enough that it is not even worth developing hard and fast rules. Of course I keep a close eye on all of the things already mentioned -- earnings growth, valuation craziness, dividend freezes, etc. INTC is one of the few sales I've made in recent memory. And I did not eliminate the position; I just went from overweight to an average-sized position (for me). And this had as much to do with my shifting impressions about the tech sector generally as it did with INTC specifically.
RE: Selling losers?? - Dividend Watcher - 01-28-2014
(01-26-2014, 06:17 PM)Dividend Watcher Wrote: CSCO? There's been a lot of speculation in the trade rags about how much "cooperation" they've given the NSA. Security-minded organizations have given pause at purchasing their advanced networking products (where CSCO makes the big money) for fear they've given the NSA big back doors. No sure what effect that's had on the bottom line but it is mentioned often enough.
To add ... just yesterday I read an article in the trade rag accusing Juniper Networks of doing the same thing.
RE: Selling losers?? - Dexter - 01-28-2014
For my long term portfolio I try to buy things that I will never have to sell, so it's mostly etfs and cefs.
I do buy some individual stocks for the long term portfolio, but I haven't sold any yet. I think a cut in the dividend would do it for me.
Good post!