11-09-2013, 12:32 PM
(11-07-2013, 07:32 PM)KenBob Wrote: I only sell a stock which is overvalued compared to future value. My future value is based on 5 years of dividend growth. I use 5 years since a longer extrapolation would be unreasonable.
That makes a ton of sense to me. "Mere" overvaluation, as measured by a somewhat higher than usual P/E should not be enough to trigger a sell on a carefully chosen dividend growth stock. But when the price gets really out of line, as measured against future expectations, then it might be a good time to take the gain and deploy the capital elsewhere.
(11-07-2013, 07:48 PM)cannew Wrote: Most of the good DG stocks have a built in corrector.
This is a very good, and often unappreciated, point about DG stocks. As earnings and the dividend grow over time, they drag the share price higher along with them.