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True to my dividend investing code, I have sold Pfizer after their recently announced 50% dividend cut to offset the purchase of Wyeth. Pfizer has been a stock that I have held for a long time, and held great faith in the company as a strong dividend growth company. However this changed quickly and the stock is no longer a component of my dividend portfolio.[ad#tdg-embedded]
As I do with every stock holding that I own does not work out the way I planned I thought back to why I was holding onto Pfizer. It was due to that dividend and the strong dividend growth over the years. However, now that I think about it more and more this dividend growth and high dividend yield clouded my judgement and did not allow me to look at the real facts. This was a company that was in a decline and it was threatening that it would only get worse with some key drugs coming off of patent. It seems that the only way out of this for Pfizer was the acquisition of Wyeth and the impact was the company could no longer afford their high dividend.
Should I have sold sooner – probably. My dividend code did not allow me to do so and in this case it hurt me. That is the risk with a buy and hold philosophy and a dividend growth strategy. This period of time (i.e. a real deep bear market) has been difficult for dividend investors as it puts into question our whole strategy. However, I am a long term investor and I thought that over time Pfizer would turn around and the market would recognise the strong dividend growth. Now that there is no more dividend growth, all that time has been lost on what turned out to be a crappy investment!
I pulled the trigger and sold also. Like, you PFE no longer was helping me meet my goals of long-term dividend growth.
BTW, great picture for this article!
D4L
Its a good thing you had less than 5% in PFE. That’s the trouble with individual stock picking, if you’re not diversified adequately you’ll get burned.
I don’t think there would have been an easy way to dodge this dividend cut, unless you watched this stock meticulously.
I could never really pull the trigger on PFE when it was trading in the low 20s.. The high payout, the constant merging and acquiring didn’t provide a stable ground for sustainable long term dividend growth.
The dividend cut caught me totally off guard! I also sold this boring stock immediately.
when i bought pfe it was without research and i doubted the buy and almost sold it turned out that i started to like it and my position has increased nicly with re-invested div. price has grown nicely latley i think i will hold to see what happens after wyeth merger
You have lots of great information, but I can’t stand those double underlined ads.