r/valueinvesting
Do you plan to hold some/all holdings forever or take profits?
Long-term dividend investor discusses the benefits of holding quality cash-generating businesses forever versus taking profits.
- Holding quality businesses that generate cash and reward shareholders for decades is highly advantageous.
- Dividends provide flexibility to redeploy cash flow to undervalued positions without selling underlying assets.
As a long-term dividend investor, I’m genuinely curious how most people here think about this.
Do you have a plan to eventually take profits from your stocks, or are you mostly buying great companies and holding indefinitely?
I completely understand trimming a position if it’s up several hundred percent and using some of those gains to add to another holding that looks undervalued or has become underweight in your portfolio. That seems reasonable from a portfolio management perspective.
But outside of that, I personally struggle to see many disadvantages to simply holding quality businesses for decades.
For example, if I own companies like TSMC, Meta, UNH, Verizon, Pfizer, Target, and other established businesses that continue generating cash and rewarding shareholders, why would I want to sell them if the original business model still holds and they earn money?
My approach is basically:
\- Core positions in high-quality companies that I intend to own forever, in different sectors industries and countries.
\- A few smaller, more speculative bets with higher upside (and higher risk).
\- A significant allocation to broad index funds for even more diversification and peace of mind.
One thing I really like about dividends is the flexibility. Instead of automatically reinvesting into the same company, I can direct that cash flow wherever it’s needed most at the moment, whether that’s adding to an undervalued position, strengthening an underweight sector, or increasing exposure to a company I have higher conviction in.
In a way,
I’m trying to build my own personal cash-flow machine: a portfolio of businesses that continuously generate income, which can then be redeployed into the best opportunities available without having to sell the underlying assets.
Maybe I’m too much in the “buy and hold forever” camp, but unless something fundamentally changes with a company, or I need to rebalance after a massive run-up, selling feels counterproductive.
How do you think about it? Do you have explicit profit targets, or are you also trying to build a portfolio that can compound for decades