Ever sell some shares and regretted it? I’m in that position at the moment. I’m a fan of dividend shares, purely because I think they are a good way of generating passive income. Well, earlier this year, one by one, I sold off my shares in three FTSE 100 dividend shares and I’m tempted to get back involved. Let me explain why.
Lloyds Banking Group – is it a good dividend share purchase?
I sold my shares in Lloyds Banking Group (LON:LLOY) earlier this year when I made a premium of around 33% on my original purchase price. At the time of selling my Lloyds shares to reinvest in other FTSE 100 companies, I thought I’d made a sensible decision. The Lloyds share price had hit 40p and I didn’t think there was scope for it to rise much further.
In retrospect, this was a mistake and I’m happy to acknowledge it. As I write, the Lloyds share price is hovering around the 45p mark and a healthy-looking dividend has been paid too since I sold. So not only have I missed out on a rising share price but I missed out on a dividend. Ouch.
You never stop learning in this game. What this episode reinforces is that investing for at least the medium term should be the goal, along with my longer-term aim of building my passive income from dividend shares.
The Lloyds share price still looks tempting – as does the dividend
Life is about learning, so I think I will need to bite the bullet and buy back into Lloyds. The current Lloyds share price doesn’t look too prohibitive, all things considered. As I wrote about Lloyds Banking Group previously, senior management have done a lot of work to streamline the workforce. This work has evidently been going well.
The risks I noted previously still exist, principally that Lloyds remains a massive organisation where tech innovation isn’t necessarily instinctive, especially when compared with young upstarts like Wise.
What swings it for me is the dividend. The next Lloyds dividend is forecast to be around 4.3% based on the current share price, which I think is pretty good considering the stock has been carrying some momentum through 2021.
Two other FTSE 100 dividend shares I’m considering buying back into
The two other FTSE 100 dividend shares I booted from my portfolio in 2021 were British American Tobacco and Vodafone, simply because I thought there were better investments out there.
The forecast share dividend yields for these two firms are currently around 8% and 7% respectively. At this very early stage of my research, I’m more inclined to get back into Vodafone because my instinct is that a 12-month share price decline of over 15% is not a fair reflection of the company’s prospects.
As ever, though, it won’t be instinct that guides my share purchases. It will be facts and figures. I’ll be more likely to invest successfully over the longer term if I do my homework and trust my investing principles.
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Garry McGibbon owns shares in Lloyds Banking Group. The Motley Fool UK has recommended British American Tobacco and Lloyds Banking Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
