The term stock sell is not one that’s regularly mentioned by dividend growth investors. Investors like us usually buy and hold for a very long time, sometimes we never sell a stock. I generally follow this rule, but with the stock market trading so high right now, I’ve decided to sell off a few holdings. I plan to sell a handful of stocks to lock in gains, then either hold the cash for the next market dip or use the cash to sell cash secured puts.
Stock Sell Details
I sold my shares of Orchids Paper Products (TIS). I held Orchids stock for 13 months and it performed very well for me. I bought 100 shares at $23.64 a share, totaling $2,372.95. I sold the stock yesterday, 105.136 shares at a per share price of $33.55, totaling $3,527.31. I made $1,154.36 which represents a 30% gain.
For the record, I don’t dislike this stock. TIS is coming off a great quarter and Q2 estimates show an 18.5% increase in revenue when comparing Q2 of 2015. TIS also has a 16.6% annualized 5-year growth rate. What I don’t like is that TIS has a high payout ratio of 81.12% and a dividend coverage ratio of only 123.27%.
Even though TIS is growing I probably won't buy shares again unless the payout ratios reduces or the coverage ratio increases.
This sell reduces my annual dividend income by $147.19.
The stock market is running hot and I've had a great year so far. I'm selling to ensure gains, while also reducing my cash risk position. I believe a market adjustment is coming soon and I'd rather leave some money on the sidelines. This money will not be stagnant. It will be used to sell out of the money puts.
What do you think of this stock sell? Do you own TIS? Are you buying or holding cash?
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