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.
Posts: 852
Threads: 5
Joined: Aug 2013
Reputation:
6
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.
Posts: 6,404
Threads: 47
Joined: Aug 2018
Reputation:
68
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.
Posts: 6,404
Threads: 47
Joined: Aug 2018
Reputation:
68
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.
Posts: 1,388
Threads: 33
Joined: Jan 2015
Reputation:
21
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.
Posts: 6,404
Threads: 47
Joined: Aug 2018
Reputation:
68
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.
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!
I look forward to your future posts.
