What would you do in my place?

[Anonymous]

A question for all of you: If one of your investments (in an interesting company in terms of its dividends) has increased significantly in value, do you sell it to pocket the gains before the possible correction or do you hold on to it?

Here is my situation: I bought Roche shares in the fall to take advantage of their dividends (already paid for this year). The price rose by ~40%. What do you think about selling these shares, waiting for the correction to come, then buying back the same number of shares and investing the difference in another dividend-paying stock?

 

I have been weighing the pros and cons for several days without being able to decide. Please give your opinion.

 

Jean-Louis

[Jerome]

Hi Jean-Louis,

I have already given my opinion on this question several times on the forum or on my blog. If you buy dividend stocks, it is because in principle you want to free yourself from the market. Let's not forget that dividends historically represent almost half of total profitability. By focusing on the price, you are therefore only seeing half of the reality. Dividend stocks are also less volatile, more defensive, and therefore less likely to suffer from a market decline. Moreover, with the strategy of increasing dividends, distributions continue to increase, even when everything else falls.

Now, if you believe that the dividends of the stock have no more room to grow, that all the payment potential is exhausted, then yes, you have to sell. For me, this is not the case for Roche. Of course, the stock could lose its value soon. But if you remain focused on the price, you risk no longer being able to be consistent with a strategy based on increasing dividends.

The only real reason to follow the price in my opinion is to not miss buying opportunities.

[Author]

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