In general, I buy shares to hold on to for a long time, quite possibly for life. As a long-term dividend investor, I do not buy stocks on speculation that they will go up within a week or two. I buy shares in some of the world’s best companies and my intention is to remain as an owner (shareholder) of these money-making machines forever.

However, there are cases when even long-term investors need to become vary and consider selling their positions in a company. If dividend yields are far higher than the company’s peers, for example, it may be caused by a lack of trust in the company’s outlooks. In this case, be sure to make your own valuation of risk and reward. A company with an impressive history, mature market position and robustness in its dividend payouts, such as the European or American dividend artistocrats, is less risky to buy than a young company fighting for market shares with unreliable dividends.

If the dividend is cut or cancelled you need to reevaluate your position. Is their a trustworthy explanation to the changed dividend? Is it a single event or the start of a new development due to more challenging conditions? Does your investment still generate the dividends that you demand from it?

Many companies benefit from certain government regulations or programs. This also leaves them exposed to changes in these conditions. If they are changed in a negative way for your company, it is important to reevaluate the company’s outlook.

Insider selling may be another indicator to follow. This is especially true if the insider selling occurs prior to announcements of bad news or declining earnings. Not only does such an act show a lack of faith from the best informed stakeholders of the company. It is also a demonstration of insiders seeing to their own interests first rather than shareholder value.

If there are questions raised concerning the accounting and reporting, it is time to pay attention. If the questions are raised from the company auditor or other senior actors it is a clear alarm bell. Do you still trust the company, or do you rather take your money elsewhere?

In general, companies with high debt burdens are to be avoided. In case you have invested in such a company anyway, be sure to follow the relations between the company and any banks or other bond holders providing the company with capital. If loan covenants are breached, they – not you – may end up being the owners of the company awfully fast.

Should there be police investigations undertaken of the company it is hardly a positive sign. Do your own little investigation of what the suspicion is and how central it is to the company’s operations. Is it a minor single event due to a local mistake or malpractice? Or does it head straight to the very top of the company? If you lose your trust in the company, be sure to make the company lose your invested money too.

What alarm bells trigger you to consider selling your positions?