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Million Dollar Portfolio / MDPSold: Hillenbrand


Subject:  Re: Poll: Are you selling HI with us? Date:  5/14/2014  5:42 PM
Author:  BabaRamDass Number:  287 of 295

Hi Eric-- You're not overlooking anything. The biggest factor in any sell decision (for me) is whether one thinks one can get better appreciation (through capital gains and dividends, if paid) elsewhere.

However, in your example, you are continuing to get a 4% yield on your original $50 investment, regardless of the current stock price. And the dividend could have gone or could go up, of course.

Last year I sold an HY Fund which was paying good dividends, but I thought it had topped out ("felt" is the better word). I reinvested the entire proceeds in FTR--primarily because of the yield, but also because I thought FTR's problems were overblown and possibilities underappreciated.

The yield on my purchase price was in excess of 10%! (and the dividends were qualified, instead of unqualified, to boot). As we speak, my purchase is up 57% and the yield is down to 6.6%. Still good, of course--but if the yield drops in half, I may care more about continuing to receive the amount which was initially 10%+, than worrying about selling FTR for a stock which promises more capital appreciation. Or not. (I have a lot of FTR, paying me a substantial quarterly dividend. As I think about it, perhaps the amount is more relevant than the percentage.)

There's no complete answer to your question, and no right or wrong answer. Yield on original price is just a factor which some like to consider, and others don't.

Having said all that, 2 non-MDP stocks (but TMF favorites)--MIDD & OLED dropped so much more today that I decided not to wait on selling HI. Sold my whole position and put it equally into those two.

What did Emerson say? 'Consistency is the hobgoblin of small minds.' Don't know the size of my mind, but I'm certainly not consistent!


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