When to Sell an Acquired Stock and Cash Out

I have written before that I do not recommend selling stocks in response to a dividend cut. That is because cyclical industries–ranging from industrial conglomerates to the larger firms dotting the energy sector–often need to cut their dividend in response to a commodity pricing slump rather than any difficulty resulting from production. There is also the general issue that dividend cuts are almost always preceded by poor earnings reports, and poor earnings mixed with dividend cuts tends to lead to lower stock prices. There is a substantial risk of selling low and locking in losses if you adopt the policy of selling a stock after a dividend cut.

Continue Reading!