Last week I laid out some of my reasons why I am hesitant about selling stocks which have cut their dividends.
This chart really sums it all up – dividend cutters as well as non-dividend payers underperformed dividend growers by about 5% on average per annum from 1972- 2005.
At the end of the day I am in this game not only for the increasing dividend income but also for the capital gains that stock ownership might lead to.
Additional research from Prof Siegel about the performance from 1957 to 2007 of the original 500 stocks of the S&P 500 index suggests that there is a high chance that a well diversified portfolio ,which is representative of the major market sectors of its days, will perform close to what the overall market returns.
Due to the different information and research out there I will choose to sell or hold a stock that cuts its dividend on a case by case basis. Additional capital, however will not be allocated to dividend cutters, although dividends will be automatically reinvested.
Relevant Articles:
- When to sell your dividend stocks?
- Diversification and portfolio allocation
- Diversification Matters
- The case for dividend investing in retirement
Popular Posts
-
I review the list of dividend increases every week, as part of my monitoring process. This exercise helps in monitoring existing positions a...
-
I review the list of dividend increases every week, as part of my monitoring process. This exercise helps in monitoring existing positions a...
-
As dividend growth investors , our goal is to buy shares in a company that will shower us with cash for decades to come. One of the importan...
-
The goal of this website is to inspire readers to identify their goals and objectives, and then create a process to achieve them. I shared t...
-
The Procter & Gamble Company (PG) provides branded consumer packaged goods worldwide. It operates through five segments: Beauty; Groomi...
-
I review the list of dividend increases every week, as part of my monitoring process. I use this exercise to review existing companies and i...
-
One of my favorite charts shows a listing of eleven consumer goods companies, and the brands that they own. It reinforces my belief that str...
-
Warren Buffett’s Berkshire Hathaway just received a dividend check for $194 million dollars from Coca-Cola. Berkshire Hathaway owns 400 mil...
-
Dividend investing is as sexy as watching paint dry on the wall. Defining an entry criteria that selects quality dividend stocks with risi...
-
Dollar cost averaging is a process, where the same amount of funds is allocated to preset investment/s at regular intervals of time. It is ...