10-05-2015, 05:39 PM
(This post was last modified: 10-05-2015, 05:40 PM by Dividendsrule.)
For a person who needs to live off of his dividends in the next decade or so, I could see taking the gifts that the market Gods give you, and sell one stock one perceives as overvalued, and reinvest into another higher yielding stock, like a REIT or something like that. Especially if it's in an IRA, not getting taxed on the capital gain, and not getting extra taxation on a REIT's ordinary income dividends.
However, as a younger guy with time to really let the portfolio compound, I don't generally sell my DGI stocks at all. There was a period of time where I was extremely tempted and it was really wracking me. But I processed the emotions and decided against it. At the time one of my stocks had appreciated 100% in a few years, now it has appreciated 300% and I still won't sell.
The reason I decided against selling is primarily to keep the diversification in my portfolio. As Peter Lynch was quoted to have said, diversification is your only free lunch.
I appreciate that your formulas and conclusion led you to say that it would be rare to sell an overvalued stock, Kenbob. What I tell people is, "reductio ad absurdum" (to reduce it to absurdity), if I were to get into the practice of selling lower yielding stock for higher yield, my entire portfolio would turn into MO (and now PM). lol
DividendDragon, it appears to me that Interactive Brokers in the UK charges 6 pounds per trade in the fixed commission structure.
However, as a younger guy with time to really let the portfolio compound, I don't generally sell my DGI stocks at all. There was a period of time where I was extremely tempted and it was really wracking me. But I processed the emotions and decided against it. At the time one of my stocks had appreciated 100% in a few years, now it has appreciated 300% and I still won't sell.
The reason I decided against selling is primarily to keep the diversification in my portfolio. As Peter Lynch was quoted to have said, diversification is your only free lunch.
I appreciate that your formulas and conclusion led you to say that it would be rare to sell an overvalued stock, Kenbob. What I tell people is, "reductio ad absurdum" (to reduce it to absurdity), if I were to get into the practice of selling lower yielding stock for higher yield, my entire portfolio would turn into MO (and now PM). lol
DividendDragon, it appears to me that Interactive Brokers in the UK charges 6 pounds per trade in the fixed commission structure.