I recently received a question from a newer dividend investor on if he should sell his shares since they are up 30% since he started investing in May 2020.
It reminded me of the indoctrination that the financial industrial complex has fed us for so many decades, which is “buy low, sell high”.
The problem with that mindset is that 1) you have to believe stocks will be higher when you need the money, which is not always the case (dot com bubble, financial crisis, Dec 2018 crash, covid, etc etc etc.) and 2) what if you want to keep the money for other purposes (your heirs, charities, etc.)?
The mindset has to be different for dividend investors.
The mindset we as dividend investors need is to “buy often, sell (almost) never”.
This is the way dividend growth investing works. You have to give it time for compounding and dividend growth to work. And work it does…if you give it time. If you constantly sell off your assets, you are never giving your holdings a chance to do its magic.
The magic of compounding takes time but your income will exponentially grow over time.
Keep your mindset right, focus on the long term, look for quality companies that you can hold for decades and that will continue to grow their dividend and just wait. It will happen!