Home Depot (HD - Get Report) 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.
Check Out All of Cramer's '5 Rules for Trimming Your Winning Stock Positions'
Click here for a free 14-day trial of Jim's Action Alerts PLUS club for investors and get instant access to a complete replay of his entire video-conference call, including all five rules for trimming your winning stock positions.
Club membership includes exclusive access to a private video conference each month with Jim, during which he also gives his latest views on the market and answers e-mailed questions from members. Membership also includes lot of other exclusive benefits, including:
- A complete rundown of all of stocks that Jim himself holds in a trust that he runs for charity;
- E-mail alerts that give you a chance to buy or sell any stock before Jim makes the trade for the trust;
- Custom research throughout every trading day from Jim and his team of stock-market analysts. You get to see in real time what they're watching each market day as they make investment decisions.
Click here to sign up for Action Alerts PLUS and watch a full replay of the video-conference call today!