No. of Recommendations: 6

In my post that you plucked the last paragraph from I was responding to the idea that one shouldn't sell dividend yielding stocks with a gain because of the need—or desire—for the income from the dividend.

culcha's post—which I was responding to—focused on the "The dividends-as-income-stream approach, OTOH, aims to build up a portfolio whose dividends will suffice to provide your needed income stream in retirement."

I was pointing out that someone could sell a stock that has appreciated and buy another one, and, rather than jeopardize their income from dividends, increase it.

Your response to that was: "Seems to me this is a very poor way to look at the situation." My next post was intended to further illuminate my post (that you quoted the last paragraph from), with a little simple math.

You now argue: "This isn't what I (kelbon) was talking about in my post when you (Dan) responded to it." Indeed it was. Here's most of the first paragraph from that post:

[…]Sometimes good companies that pay steady, rising, and predictable dividends see their stock prices increase substantially. The stock price goes up, the dividend yield goes down. Of course, this doesn't affect your income from those dividends, but it often presents opportunities elsewhere for you to increase your income from dividends. In other words: sell the winner with its now diminished dividend yield if you can find a relative bargain that is of modest value and has a meaningfully higher dividend yield than the stock you are selling.

Of course, selling a winning stock that you're invested in for the long-term just to increase your income from dividends isn't necessarily the best strategy unless your sole objective is to increase your income stream from dividends in the here and now. But, another subject for another day…

Print the post  



The 2009 BMW Method Conference has been cancelled, due to minimum attendance numbers not being met. We hope to continue the annual BMW Method Conference tradition next fall.

Learn about the first four conferences on the BMW Method Website.

The BMW Method FAQ

BMW Method Website
Annual Conference Videos and Other Resources & Services
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.