How do you manage your Dividend Portfolio?

[rsingh6675]

A question for Retirees managing Dividend paying portfolio?
For stocks that pay 6-15% dividends, these stocks generally don't appreciate much. However, sometimes as with every stocks, they start going down. Do you put stop loss or do you let it go down & keep the dividend coming? Or do you decide to get out with a loss? Sometimes these stocks comeback to their original price & you still collect your dividend.
Example---I bought PMM @ $7.70. It PAYS 6% dividend but the price is down to ~$7.00. It is still paying me dividend. I didn't put stop loss & I haven't sold it. I am hoping it will come back & I will keep collecting dividend for next 2-5 years.
How do you handle your stocks when price start going down?
Thanks.

 

[KingB]

How do you handle your stocks when price start going down?
Thanks.

A similar question: What do you do when the stocks go up? Do you sell and take the capital gains.

 

[jayc]

In my IRA or Roth (no IRS paperwork) I sell covered options with a strike price above what my cost is. Sometimes the stock gets assigned and you can then buy it back. Watch out if the x-div date is in your option date range, because someone will exercise it and capture your dividend. Also at some brokers the commission is much higher when assigned.

When the stock blips up I also sell covered options as close in as possible.

There are pros and cons to this and many other strategies.

 

[FinanceDude]

If I were retired, I would not care as much for what the stock itself is doing, rather that the dividend payment is steady and nearly certain. Appreciation in these stocks is icing on the cake. Particularly if you NEED the dividends........

I have YET TO SEE someone making liberal use of stop losses make real money. Usually they are skittish folks and end up getting out on a pullback and miss an intraday or next day rebound which limits their upside.

Covered calls are still a good strategy, as long as you are not in love with the stock involved. If people took emotions out of investing, they would do a lot better........

 

[yakers]

I bought some Excelon (EXC) mostly for the dividends. It has dropped a little below where I bought it and I am wiling to hold it for the dividends but am trying to decide whether to tax loss harvest, another factor in owning individual stocks.

 

[haha]

A question for Retirees managing Dividend paying portfolio?
For stocks that pay 6-15% dividends, these stocks generally don't appreciate much. However, sometimes as with every stocks, they start going down. Do you put stop loss or do you let it go down & keep the dividend coming? Or do you decide to get out with a loss? Sometimes these stocks comeback to their original price & you still collect your dividend.
Example---I bought PMM @ $7.70. It PAYS 6% dividend but the price is down to ~$7.00. It is still paying me dividend. I didn't put stop loss & I haven't sold it. I am hoping it will come back & I will keep collecting dividend for next 2-5 years.
How do you handle your stocks when price start going down?
Thanks.

I think you must be very careful about buying "high dividend stocks", and you must be very careful about buying any stock in which you are not 99% confident. 100% is a lot better. Troubled companies paying high dividends are one of the easiest of the many easy ways to lose important money.

There is no blanket answer to the dilemma that you mention. I know nothing about PMM itself.

Ha

 

[grasshopper]

I use Vanguard's High Dividend Yield ETF. I don't reinvest and let the big Muckamuck's figure it out.

 

[CyclingInvestor]

I am retired and living (entirely) on stock dividends, but I own stocks that pay about 3%-3.5% currently while growing earnings and dividends an average of about 6-10% per year (ABT, ADP, JNJ, KO, PG, etc).

I have never used a stop loss (in decades of investing), nor have I sold a stock BECAUSE its price went down (although I have sold WHEN the price was down).

I track about 30 stocks, all which I consider to be well-managed. I own the ones (5-20) that are currently undervalued (IMO) relative to the other ones I track (I always stay 100% in stocks). If a stock I own becomes overvalued (IMO) compared to one that I track and do not own, then I sell it and buy the better value.

This means I usually sell because a stock went up faster (or down slower) than its peers. On occasion I sell because I feel I cannot evaluate a stock anymore (financial stocks a few years ago), or I re-evaluate its future long-term growth downward (never upward yet) which drops its valuation.

 

[freebird5825]

I use Vanguard's High Dividend Yield ETF. I don't reinvest and let the big Muckamuck's figure it out.

I am no stock picker, and I know that.

My easy way out...VHDYX, the mutual fund equivalent of this ETF. No fuss, no muss, and am reinvesting all dividends.

 

[haha]

Here is an article which gives a pretty good and short look at one good way to go about a dividend strategy.

Dividend Growth Investing Strategy - Little Glitz, But Lots of Profit | InvestorPlace

 

[steelyman]

I bought some Excelon (EXC) mostly for the dividends. It has dropped a little below where I bought it and I am wiling to hold it for the dividends but am trying to decide whether to tax loss harvest, another factor in owning individual stocks.

Greetings from a fellow Exelon stockholder. I've bought various lots of EXC at different prices, including some more recently at relatively low prices. I think it's a decent long-term hold, and the dividends are good. I will sell (through calls) the higher-priced lots at some future date when I want to offset gains from elsewhere but I will hold on to the ones with the lower cost basis.

To the original question in this thread: for me, it depends on intent when I originally purchased the stock. For example, recently I bought and sold NIKE and Hewlett-Packard knowing I didn't want to hold them long-term. I bought when I thought the price had gone down unusually (after earnings). I set a conditional order that was triggered when the stock price rose to 8% above my original cost. And simultaneously set a trailing stop limit (not loss) sell order with the limit price at 4% below the then-appreciated value. It worked well, required no monitoring from me. So I'll probably do that again. However, it seems you can do just about anything lately and make money, so I'll be wanting more experience with this type of trade before I consider it something I'd do regularly. At the time, I had just accumulated some dividends that I wanted to do something with rather than just have them sit there in a cash account at the brokerage.

 

[Danmar]

First of all I would hardly ever consider a common equity paying more than 5% dividend. A high dividend is a sign that the dividend is not secure or there is little prospect of growth(or both). Like Cycling ,I tend to be in the 3-3.5% yield range. Minimal rebalancing as this would cause tax since all my positions are above the cost base. Buying more positions as excess funds become available. All I really care about are the dividends. These are starting to increase nicely now. Don't really understand why someone would feel the need to use an ETF for dividend investing. Diversification would seem to be less a concern when investing in these well established co's. Why pay away 50bp's of yield(Canada) when it is easy to do it yourself? More tax efficient too.

 

[DeborahB]

I mostly buy when a stock price is relatively low, as long as the fundamentals are sound. I have a varied portfolio, mostly large companies but not exclusively. I have invested small amounts of money in very high dividend stocks, for fun, knowing that I couldn't lose a whole lot and might gain a lot. So far I have some losers and winners but I haven't sold anything in quite a while. I find that knowing it pays a dividend helps me not panic when the price drops. It took me a while to be calm about this. Some of the huge unrealized capital gains make up for the smaller losses over all, too.

 

[soupcxan]

I buy VEIRX.

 

[haha]

Exelon-Constellation Merger

I bought some Excelon (EXC) mostly for the dividends. It has dropped a little below where I bought it and I am wiling to hold it for the dividends but am trying to decide whether to tax loss harvest, another factor in owning individual stocks.

Yakers and Steelyman mentioned owning this stock, which has been hit since then by the TEPCO problems at Fukushima and now by a tepid (at best) reaction to the merger announcement. I have a small position, bought after Fukushima.

Overall this seems to me to be a well managed operation, both as to plant operations and strategic focus.

However, I think the merger will probably eliminate or decrease any near term dividend increases.

Do you two (or anyone else) have any comments about EXC, or the merger?

Ha

 

[yakers]

The merger is still too new to me to digest but it does look like a good fit. I will just hold the merged stock and see how it fits dividend wise. I have had another merger effect me my Progress Energy with Duke which I did not care for but will probably hold Duke as it does look pretty safe. I don't trade much, average holding is something like 8 years and then I tend to sell for reasons like re balancing or needing cash to live. I am not as good at figuring out when to sell as when to buy.

 

[unclemick]

Hmmm - have Exelon in my Vanguard account -originally bought in the 90's in a DRIP account.

As one of 'my few good stocks' may do something come football season.

What does football have to do with it? Hormones of course. Was a dividend stock (one of many) in early ER.

Now I'm an indexer.

heh heh heh - so I will sell someday when I need the money - regardless of Excelon's prospects. I believe my original purchase was Commonwealth Edision(Chicago) - that's how long ago. Several mergers back.

 

[steelyman]

The merger is still too new to me to digest but it does look like a good fit. I will just hold the merged stock and see how it fits dividend wise. I have had another merger effect me my Progress Energy with Duke which I did not care for but will probably hold Duke as it does look pretty safe. I don't trade much, average holding is something like 8 years and then I tend to sell for reasons like re balancing or needing cash to live. I am not as good at figuring out when to sell as when to buy.

I agree with this opinion, and I intend to hold my Exelon shares. The reason I purchased it initially is that, in a trust portfolio that I manage (not my own), I noticed it was a steady performer over the long term (decade or longer). The dividends are not so shabby, either, so I am happy to hold it. Some of the shares I own were bought at too high a level, but hey I reason that is my mistake, not Exelon's.

 

[dessert]

I am retired and living (entirely) on stock dividends, but I own stocks that pay about 3%-3.5% currently while growing earnings and dividends an average of about 6-10% per year (ABT, ADP, JNJ, KO, PG, etc).

CyclingInvestor, do you invest in all common or preferred stocks too? I also would ask, "why one over the other"? I am just curious to see how you view this. I know someone who only does "preferred" and I'm looking into this myself.

 

[CyclingInvestor]

CyclingInvestor, do you invest in all common or preferred stocks too? I also would ask, "why one over the other"? I am just curious to see how you view this. I know someone who only does "preferred" and I'm looking into this myself.

All common stocks. I feel they offer more over the long term than preferreds - 3% dividends growing at 8% vs 6-8% dividends with no growth for similar high quality companies.

 

[dessert]

All common stocks. I feel they offer more over the long term than preferreds - 3% dividends growing at 8% vs 6-8% dividends with no growth for similar high quality companies.

I hear you. My friend says that he doesn't care about growth so that is why he does preferred and never sells or cares about anything but the dividends. He's happy so that's all that matters.

 

[Moscyn]

The stocks I purchase for dividend income are blue chips giving around 3 to 4% dividends and since I buy them low, I have not yet sold any of them. The fluctuations in their share price do not worry me much. Having said that, I am currently reviewing my portfolio to add stocks paying 6 to 8% dividend but I want to read up more on this before I start purchasing. It will be like part of my "mad cap" fund and will be like a small percentage of my portfolio and I won't need to rely on the dividends for my income.

 

[Pete44]

I live on dividend income waiting for SS to kick in. I'll take it at 62 next year. I own a few stocks but mostly I own junk bonds funds. I own mutual funds instead of ETFs. I want a manager buying and selling and don't begrudge that extra expense of the mutual fund. I've also found high yield mutual funds to be more stable than ETFs although I own a little DHF and PHT. The stars for me have been JAHYX, MWHYX and STHTX. Portfolio was up about 13% last year and took the dividends. You can see when my portfolio is charted against the Dow or S and P 500. It wasn't quite there in long run but there wasn't the volatility. I sleep well at night but I check prices every morning.

I'd sell the funds if I saw a 5% loss. JNK use to irritate me and got out of it. People jump in and out of that ETF around the xdate like clockwork. The volatility I do have in my portfolio comes from the few blue chip dividend stocks I own. Took a big gulp when I saw Chevron down 6% last week. Plan to sell it and take the Long Term gain.

 

[Coolius]

I hold mostly energy stocks in my portfolio, giving about 3% dividends yield on average. ( RDS-B, CVX, STO )

Like some of you, I write covered calls a few times a year, usually going out about 2-3 months, and taking into account any ex-div dates during that time frame. Using this technique, I hope to derive another 1-2% return in addition to the dividend each year.

Although the price of the stock itself does not affect this money stream, I, too, feel concerned at large drops especially when the macroeconomic situation is so uncertain these days. The debt burden, out of control spending in the US, problems in Greece, Europe, the Middle east, et al, all serve to keep the market off balance with the possibility of sudden and significant declines when bad news breaks.

Just need to do what we can to minimize our risks.

 

[Nords]

The "Dividend Growth Investor" blogger has interesting thoughts on various companies every week. Here are two of their posts on building a core portfolio and the risks of the style:
Dividend Growth Investor: Is your dividend income riskier than expected?

Dividend Growth Investor: 16 Core Dividend Stocks for your income portfolio