Dividend Inc

When to Sell Dividend Stocks

Greetings Dividend Growth Investor,

The question of dividend cuts is fascinating since it is actually a potential buy signal rather than a sell signal. All dividend cuts take place after the stock has taken the largest portion of the declines that are likely to occur (in the short and medium term.)

A dividend cut reflects the company management's realization that action needs to be taken in order to shore up the company's finance. Once the cut takes place, an investor can then fairly assess the potential for a healthier balance sheet.

Another method for avoiding the decline in dividend paying stocks is to sell when the stock is selling at a historically low yield and buying at a historically high yield. This keeps the perspective on the company in relative terms rather than trying figure out when management is going to make the tough decision to cut the dividend long after the decline has taken place.

Some good sources for understanding this and other key dividend investing concepts without having to do the work yourself is found in the Investment Quality Trend newsletter (www.iqtrends.com). In their newsletter, IQTrends gives you the historical high and low yields for over 300 high quality dividend paying stocks. Another good source is the book Relative Dividend Yield by Anthony Spare and Nancy Tengler. Finally, my all time favorite is Mergent's Dividend Achievers (mergent.com/productsSe...) as recommended by Peter Lynch in the book Beating the Street.

Because of these sources of information, I had a great 2008 and I think that they will benefit anyone who takes careful consideration of the ideas contained within. Enjoy.

Touc
Dividend Inc.
www.dividendinc.blogsp...