Updated: March 8, 2017
Dividend stocks are different animals. If you practiced “buy and hope” in your previous investing life, there are some habits you should leave behind.
Using a “stop loss” is one of them. In theory, stop losses limit downside while letting winners run higher. If a stock closes below a certain price, or drops a certain percentage, the “stop” will make you sell before things get worse. Instead of holding a stock all the way to zero, you’re forced to book gains (or at least cut losses) early.
It sounds like a no brainer. Why wouldn’t we want downside protection on all of our positions?…