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Strategies & Market Trends : Dividend investing for retirement

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To: Cogito Ergo Sum who wrote (6054)	10/11/2010 8:28:36 PM
From: chowder	Read Replies (2) of 34328

I had a couple of stocks that got ahead of themselves and I too did lock in capital gains. They were in an IRA so, I won't have to pay any taxes on them. At the time, I sold shares in CTL and KMR and purchased other dividend paying stocks which did have lower yields. Normally, this would not be the correct way to rotate profits. However, I don't add funds to this account and I wanted to get more diversified and I was willing to take a lower yield as long as it was with a company that had a history of favorable dividend increases. I have no intention of selling all of my shares in any equity in that particular IRA, but going forward, if share price causes a company to become overweighted beyond my risk tolerance, my objective is to sell "some" of those shares and buy another that provides better "absolute" returns than the current holding. For example, if I were to sell some of my shares in KMP in order to bring it back down to equal weighting with other holdings, KMP pays a 6.20% yield with a 7.28% annual compounded dividend growth rate. The total "absolute" return is 13.48%. I would need to find something that pays better than that.

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