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.

As a real world example, imagine you bought Wal-Mart for its dividend yield at $45 a share and over a couple of years it rose to $73 a share, which it has. If you sell your Wal-Mart shares you can take your profits and now buy shares in a company whose dividend is yielding considerably more than Wal-Mart's is at the current stock price.

Wal-Mart is an interesting example, I actually bought some when I was less focused on dividends. But look at their average dividend yield from 2000 to 2011 (according to Valueline):
4%, .5%, .5%, .6%, .9%, 1.2%, 1.4%, 1.8%, 1.7%, 2.1%, 2.3%, 2.7%.
Recently, with the price surge, this yield has dropped a a bit -- down to around 2.15% During most of these years though the stock was dead money. The dividend payment, however, is more than 6 times what it used to be (and it's still rising). So now, in a way I'm more interested than before -- when I actually bought it!

I have indeed thought about selling for just the reason you've mentioned. I think I can find more productive places to put the money. (SYY? CL?? PG??) So I might make a move. I'm really thinking about this one.

OTOH, now that the sleeping giant has awakened, then, granted that everything else has been increasing, (sales, cash flow, book value, dividends) -- maybe it has some more surging to do. Certainly if it surges above the middle line on Mike Klein's chart, I'd be ready to head for greener pastures.

culcha