Home Depot (HD) has long been one of Jim Cramer's favorite stocks, so it wasn't a surprise when his Action Alerts PLUS charitable trust initiated a position in the stock in early March after the company made an outsized 32% dividend hike the boosted its yield to a generous 3%. But then the stock rallied unexpectedly, so Cramer sold -- in line with Rule No.1 of his "5 Rules for Trimming Your Winning Stock Positions."
"If a high quality company suddenly becomes an 'accidental high-yielder' because its stock has come own at the same time that its dividend has increased, you have to do some buying even if you have to hold your nose to do so," Cramer said in unveiling his "5 Rules for Trimming Your Winning Stock Positions" during an exclusive conference call with members of his Action Alerts PLUs club for investors. "However, the flipside is a fabulous rule for trimming: 'If stock rallies on absolutely no news, [then] you have to do some selling and at least book some profits lest you give them back.'"
The rule worked out for Cramer with Home Depot. After his trust trimmed back its HD position at the $204 level, the stock dropped down 10 points in a straight line.
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