We recently sold a dividend stock at a loss. Initially, we bought it in July 2017 after reviewing its strong financials and solid fundamentals (such as price-to-book ratio, gearing, and revenue). When COVID hit in 2020, we purchased more shares as prices dropped, anticipating a rebound once the crisis passed—especially since the company is connected to tourism. The stock did recover somewhat, but after 2022 it began to decline again and has stayed weak since. Additionally, the dividend yield kept decreasing each year, eventually falling near to the 10-year annual inflation average of 1.75%1.
In total, we incurred a -32.6% loss based on our entry and exit prices, made worse by the stock’s wide spread and low liquidity, which meant selling at the bid price. Even after accounting for the dividends we received, the overall outcome was still negative at -21.3%. The good thing was the company share represented only at 0.4% of our total Bedokian Portfolio value.
Cutting losses can be tough for investors, but it is often necessary to free up capital for better opportunities rather than letting funds stagnate. Potential price rebounds or dividend increases are not guaranteed. Instead of viewing one’s investment as hard-earned money lost, consider it as strategic capital to be redeployed effectively. This is one of the true marks of a rational investor.
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