When do you divest a share assuming if you are a passive income (largely dividend stock) kind of trader? ? - Seedly
 

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Asked by Anonymous

Asked on 26 Feb 2019

When do you divest a share assuming if you are a passive income (largely dividend stock) kind of trader? ?

Is it based on real-time profit of a set xx% (for e.g. 15%) that you set internally or is there a simple process to follow or to weigh divesting vs keeping share for dividends.

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Billy Ko
Billy Ko
Top Contributor

Top Contributor (Jan)

Level 7. Grand Master
Answered on 13 Jan 2020

I would divest when the company faces issue maintaing its dividend i.e. payout ratio higher than 100% or is eroding into its assets / constantly having to dilute its company in order to raise more capital for funding. I've faced instances where I held onto high yielding (10%) yielding companies which eventually went bust simply because they couldn't sustain their dividends.

Either that or when I truly require the money.

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