Sell decisions are based upon individual company fundamentals focusing on valuation metrics and business analysis with particular emphasis on anticipated forward dividend yield levels. Sell candidates are typically in the upper end of their valuation ranges. In addition, certain portfolio characteristics and potential reinvestment alternatives are considerations in the decision-making process. Exit strategies are based upon the availability of attractive call option premium and annualized total return relative to required holding period as compared to outright sell. Agreement among team members is attained following review of exit strategies and final decisions are then executed.
Sell discipline factors include:
- Valuation becomes excessive
- Dividend yield falls
- Dividend outlook deteriorates
- More attractive opportunity
- Covered call writing strategy
View Results of Flippin, Bruce & Porter’s Value Investment Approach.