Dividend cuts from Dividend Aristocrats
What happens when one of your beloved stocks suddenly decides to cut it's dividend? Do you sell it or do you hang on to it in the hopes that one day it'll raise it's dividend again.
What if you, like a lot of Canadians own Manulife Financial. What do you do at this point?
Well the first thing you should do is evaluate your portfolio and risk allocation. The MFC dividend cut is a solid and stark reminder that anytime you invest in the stock market there are two things that are never guaranteed: 1) the rise in value of the stock and 2) a steady dividend. Those that though it was safe suddenly got spooked. The TSX as a whole sold off - especially the insurance and financial sectors. The next day the buying was back because people started to believe that the MFC dividend cuts only applied to them. Or do they? I guess only time will tell.
The important thing to learn from all this is that dividend cuts can and will happen so the dividend that one gets from their portfolio should never be thought of as a guarantee. If one needs more guaranteed investments in one's porftolio, one should turn to fixed income instruments.
The other thing that investors have learned from the past year is that stocks don't always go up and when they fall things can get really nasty fast.
As for what I'm doing with MFC? I'm intending to hold it as I have a 25-30 year investment horizon.
What if you, like a lot of Canadians own Manulife Financial. What do you do at this point?
Well the first thing you should do is evaluate your portfolio and risk allocation. The MFC dividend cut is a solid and stark reminder that anytime you invest in the stock market there are two things that are never guaranteed: 1) the rise in value of the stock and 2) a steady dividend. Those that though it was safe suddenly got spooked. The TSX as a whole sold off - especially the insurance and financial sectors. The next day the buying was back because people started to believe that the MFC dividend cuts only applied to them. Or do they? I guess only time will tell.
The important thing to learn from all this is that dividend cuts can and will happen so the dividend that one gets from their portfolio should never be thought of as a guarantee. If one needs more guaranteed investments in one's porftolio, one should turn to fixed income instruments.
The other thing that investors have learned from the past year is that stocks don't always go up and when they fall things can get really nasty fast.
As for what I'm doing with MFC? I'm intending to hold it as I have a 25-30 year investment horizon.
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