Help Topics for using the Simply Investing Report
- When Should You Sell a Stock?
Here are the following things to consider before you decide to sell a stock:
- is the stock overvalued?
- is it no longer a quality stock?
- is there a better opportunity elsewhere?
- do you need to spend the money on something else?
Selling a stock is based on many factors, including your own personal situation.
Let's look at the following in more detail:
Is the stock overvalued?
A stock is overvalued when it's current dividend yield lower than its average dividend yield.
Is it no longer a quality stock?
A stock may not be a quality stock if it has stopped growing it's dividend, is no longer profitable, has increased debt, or has payout ratio of over 100%. The SI Criteria column in the Simply Investing Report can be used as a general guideline, any stock with a low grade (out of 9) may indicate a company that is no longer a quality company.
Is there a better opportunity elsewhere?
Perhaps you are only earning 1.5% dividend yield on your stock, but your could be earning 4% in another undervalued quality company, then you may want to consider selling your current stock.
Do you need to spend the money on something else?
Perhaps you need to spend the money on your child's education, a renovation, new home/car, a vacation, or any other reason. At the end of the day your are investing so that you can enjoy the fruits of your labor, if you need to some money for something that's important to you then you may consider selling some of you stocks. However remember the opportunity costs, you will be forgoing any future dividends or capital appreciation for any stocks that you do sell.
Note: If you've already purchased the online Simply Investing Course, click here to log in to the course page and view Module 5 for a review of "When Should You Sell a Stock".