Friday, January 16, 2009

When to buy back dividend shares that you have previously sold?

In a previous article, I discussed that when your dividend stock cuts or eliminates its dividend, it would be a good decision to admit that you were wrong on this decision and sell immediately. I understand that selling and admitting that one is wrong is a very difficult decision from a psychological standpoint. But it is essential to cut your losses on some investments that you would not otherwise consider buying in order to protect your capital and stay in the game.

Admitting that you are wrong and taking a decisive action, instead of hoping that the things would turn out for the better works both ways. When companies cut their dividends, I sell their stock immediately.My recent experience with ACAS is an example of that. However when a company that has cut or eliminated their dividends announces that it would start increasing its dividends again or its initiating a dividend payment I would definitely consider initiating a position. Dollar cost averaging my way into this position could be an ideal way to get a feel of how your investment might perform. Another entry signal that one could look for is for the company to increase its dividends for at least ten years, before buying back their shares in the stock.

Relevant Articles:

- Dollar cost averaging
- Dividends and The Great Depression
- ACAS Dividend News
- Worst Performing dividend stocks so far in 2008

1 comment:

  1. Great information. I've subscribed as I've recently starting looking for more information regarding dividend groth.

    ReplyDelete

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