On Monday of this week Washington Mutual (WM) announced that they were slashing their dividend. This was not totally unexpected, WM's mortgage business has suffered as a result of the sub-prime meltdown. I held a small position in WM when the announcement came out.
One of the more difficult decisions an investor has to make is when to sell? In this instance, it was not a difficult decision for me. As a income investor I expect the companies I invest in to increase their dividends each year. If times are tough and a company holds its dividend flat for one year, it will be evaluated based on expectations of future performance and I could decide to hold on to it for an additional year and then evaluate it again. However, I want no part of a company that cuts its dividend, as such, I sold my position in WM on Tuesday. It seems I am not the only person that feels this way, WM's price continued to fall during the week.
Full disclosure: At the time of this writing, I do not own shares of WM.
What rules do you consider when deciding to sell a stock?
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