Tuesday, July 18, 2017

The Pain of Rebalancing

Every so often, it is good to examine your portfolio.  In my case, there are a number of stocks that I purchased for their high dividend yield.  Some have risen a bit in value, others, such as SPH and FTR, have dropped a good bit.  So does it make sense to take my losses and reinvest that money in a mutual fund?

Curiously, what made those high-dividend stocks so attractive is often even more the case at the lower stock price.  At SPH's current $24.02 price, the annualized dividend yield remains 14.64%.  FTR now at $14.31 still has a 16.72% yield.  One tragedy of my portfolio, AT, has dropped dramatically because they stopped paying dividends some time back, amid allegations of intentional misrepresentation of their earnings.  The question is whether to shoot this dog and reinvest that money, or hope for the stock price to rise.

Dog shooting is often done at the end of the year, because capital losses offset capital gains (up to a $3000 capital loss for the year; beyond that point, the loss carries over to subsequent year capital gain calculations).

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