11-11-2013, 09:16 PM
Hey NilesMike -- Welcome to the forum! Glad you found us.
I absolutely use high yield (relative to the stock's historical yield) as one of the signs that it is a good time to get into a dividend growth stock. It is only one of many things that I look at, of course, but if all the pieces are in place for the company, its earnings, and hence its dividends to prosper into the future, then buying at a moment that the yield is historically high can really boost your long-term returns. Really, it is a company specific way of saying that the income stream is on sale, and it is a good thing, so long as the sale is temporary and not caused by some underlying problem that will put your capital at risk.
As for selling, it is reasonable to argue that the converse is also true, but as we've been discussing over here, I think the sell decision is a lot more complicated. So far, I've been a buy and hold guy for the most part, but if I get into selling, I imagine that low yield (again relative the the stock's historical yield) would be one of the factors that I look at to help confirm that it would be a good moment to sell. I've been reading and thinking a lot about whether to consider doing more selling, but my thoughts are far from crystallized on the subject.
I absolutely use high yield (relative to the stock's historical yield) as one of the signs that it is a good time to get into a dividend growth stock. It is only one of many things that I look at, of course, but if all the pieces are in place for the company, its earnings, and hence its dividends to prosper into the future, then buying at a moment that the yield is historically high can really boost your long-term returns. Really, it is a company specific way of saying that the income stream is on sale, and it is a good thing, so long as the sale is temporary and not caused by some underlying problem that will put your capital at risk.
As for selling, it is reasonable to argue that the converse is also true, but as we've been discussing over here, I think the sell decision is a lot more complicated. So far, I've been a buy and hold guy for the most part, but if I get into selling, I imagine that low yield (again relative the the stock's historical yield) would be one of the factors that I look at to help confirm that it would be a good moment to sell. I've been reading and thinking a lot about whether to consider doing more selling, but my thoughts are far from crystallized on the subject.