Know When To Grab the Cash

Decide to Grab the Gain or Hold for Dividends

There are three primary methods I use to realize gains from an investment. Of course, the first is that I want most of our investments to pay a growing dividend supported by growing earnings. The second is to be able to sell an investment for more than I paid for it. The third, is to sell covered calls (options) on stocks we own. The question is, “when is it wise to grab the gain by selling the investment and when is patience a better course to just collect the dividends?”

Brandywine Realty Trust (BDN)

Good dividends but limited dividend growth based on history

BDN is: “Organized as a real estate investment trust (REIT), we own, develop, lease and manage an urban, town center and transit-oriented portfolio comprising 173 properties and 24.4 million square feet as of September 30, 2020. Our purpose is to shape, connect and inspire the world around us through our expertise, the relationships we foster, the communities in which we live and work, and the history we build together.” That is lovely. Furthermore, the dividend yield and dividend payout ratio are both attractive and the REITNOTES “ReitRating” is a decent 7.7.

The yield is 6.74%, so in September I purchased 50 shares for Cindie’s ROTH and another 50 for my ROTH at $10.14 per share. The price dropped in October, so I added another 50 shares to both accounts at $8.85 per share. Yesterday the price rose to $11.49 per share and I sold all 200 shares. Why?

Grabbing the Cash

The gain on the sale of BDN was 21.0%. That is more than three years of dividend payments. I don’t have to wait three years to get the cash. Instead, in less than three months it was obvious to me that I could have the cash now. While BDN may continue to appreciate in share price, I don’t think waiting is worth the potential added gain. If BDN has another price drop, I may repurchase the shares because it is still a good REIT.

Putting Cash to Work with DGRO

DGRO has a good record for annualized dividend growth

Yesterday I also purchased 100 shares of iShares Core Dividend Growth ETF (DGRO). DGRO has a yield of only 2.28%, but the dividend growth and diversification make this a good long-term investment. Using the resource at ETFREPLAY, you can see both a chart and table DGRO’s growth in dividend payments.