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When it comes to our portfolios, we have the buying part down. Log on to any financial website, open any investing magazine or turn on CNBC and you’ll find nine million different versions of what stock to buy. This kind of advice is pretty much everywhere and forms the basis for the entire financial media industry – how, when and what to buy. And with some basic knowledge, and the ability to cut out the fat, building a portfolio of top-notch dividend stocks is relatively straightforward.

So, if that’s the easy part, what’s the hard part? Knowing when to cut bait and head for the hills.

Dividend investors tend to be long termers or buy-and-holders, who stick with their stocks through thick and thin. That’s certainly an admirable position and I agree with it for the most part, but sometimes it may be better to simply part ways. No way am I advocating trading here, but ‘when’ to sell a dividend stock could save you from some big-time heartache, not to mention the potential losses.

Don’t Just Think About Cash Flows

The great thing about quality dividend stocks is that they generate great cash flows and, more importantly, they like to share those cash flows with you and me. There is a school of thought that comes along with buying quality dividend stocks: as long as XYZ stock is paying a check every quarter, there’s no reason to sell it. Perhaps ever. The focus is on portfolio income rather than share price. Price is irrelevant to the equation.

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