Andy George is an accountant with years’ experience as a lecturer. Andy was financial correspondent for eight years at the Cyprus Financial Mirror where he wrote articles on business & accounting related issues to a non-technical audience.

He is the author of eBooks: How to write and Publish Your Own With a Shoestring Budget http://www.budgetebook.com New! Easy Way to Make Auto-Pilot Income http://www.budgetebook.com/cbmall

So then, what else? I would argue that a company that just pays a dividend isn’t good enough. Instead, I will only purchase those companies that have a long history of raising their dividend every year. This will eliminate a whole bunch of risk. It would eliminate possibility that company is ‘cooking their books;’ after all, money has to be there to pay shareholder. And because this company has been raising their dividend every year for many years, it eliminates risk of investing in a start-up company that may not even be around in a year or so.

Also, rising dividend every year would help off-set risk of inflation and risk of a lower stock price during year would actually accelerate my income from security.

Since I would want my position in stock to grow through years, thus increasing my dividend income, all dividends would be reinvested into stock, until retirement. A lower stock price, therefore, would purchase more shares, at a higher dividend yield and would simply accelerate my dividend income.

Now question may arise, when would I want to sell a stock? Certainly not because a Merrill Lynch has downgraded whole sector – that’s a blessing in disguise – a temporary lower stock price just means a higher dividend yield, allowing my dividend to purchasing more shares.

The question of when to sell a stock puts me in mind of a quote I once read by Jacobsen – “Judgment is one thing you cannot learn at college. You either have it or you don’t have it.” The time/reason to sell a stock varies. If there comes a time when you have so much money tied up in just one stock position that it’s making you feel uncomfortable, sell some of it. If company you purchased stopped raising its dividend you may want to lighten up and/or divert funds you were putting into that security into one that is continuing its program of increasing their dividend every year.

A company may trim their dividend – when and if this happens (and it does) my advice is not to be overly anxious to sell stock. Find reason why company is trimming their dividend. It may be to reduce debt or for possibility of acquisitions. The company’s dividend yield may have been around 6 percent, and all their peers’ dividend yields are around 4 percent. Certainly do not add to your holdings in this company, but give management a chance to see how they handle extra cash, since they appear to have better use for money, other than to pay their shareholders. The resulting growth in that company may make up for lower dividend yield and two or three years later you’ll get a better perspective on whether to sell company or not (or to continue adding more shares through new monies, or simply to allow dividends to continue purchasing stock).

For more excerpts from book ‘The Stockopoly Plan’ visit http://www.thestockopolyplan.com