Lately, I have focused on buying stocks that pay good, sustainable dividends. Some of you might be wondering what indicator I might use to determine when to potentially sell some of my shares. Well, one thing I like to do is look at the projected annual dividend and multiply that by 5 years. So, if the price average (i.e. the cost basis) of a stock is $20 a share and pays a projected annual dividend of $1.00 per share, then once the stock price hits $25 per share [$20 + ($1.00 x 5)], I will look more closely at it to see whether significant further price appreciation is anticipated or not. If so, I’ll continue holding it for a little while. If not I’ll go ahead and start selling.

I base the above hold/sell determination not only on the individual stocks themselves but also on the overall stock market since most individual stocks move with the major stock market indices. So, if significant price appreciation is anticipated for the major stock market indices, I’ll be inclined to hold. Otherwise, I’ll be inclined to sell.

So, if the example scenario above happens quickly, then I would have a 25% gain to cash out on which I could apply to new opportunities. If the targeted price appreciation doesn’t happen until the end of the 5 year period then I could cash at that time with a 50% gain (the 25% in price appreciation + the 25% collected in dividends over that 5 year time frame). So, this might be a good approach to consider using for your investments as well.

You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing (https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/).

Make it your goal to learn these investment techniques so that you can progress towards achieving the financial freedom and independence you’ve always dreamed of.

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