When to Sell Dividend Stocks

Glaser: We've spent a fair amount of time talking about the best way to buy dividend-paying securities, but how do you think about the best way to exit one of these positions? Peters: You're right. Selling doesn't get as much attention, but it probably should get twice as much attention because it’s twice the decision-making. Typically, if you’re selling one stock, you’re also going to be buying something else. It might be another stock or another asset for your portfolio or perhaps you are moving the money on such as if you're buying a car, a house, kids' college education, or something like that. So, it is complicated.

I'd start with the personal-financial decisions that you might have to make. If you need money from your portfolio, you have some withdrawal that you have to make, money you need to take out in the next couple of years--that money shouldn't be in the stock market in the first place. But if the money is staying inside your portfolio, then I tend to think of two kinds of sales. There are defensive sales, and there are offensive sales.

Source: Morningstar

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