Exxon Mobil Corporation (XOM): Wisdom From Warren Buffett That is Especially Relevant Today

Alternatively, consider railroad Norfolk Southern Corp. (NYSE:NSC). Had you bought shares one year ago, you’d be sitting on a nice 17% gain including reinvested dividends. The stock now trades for a trailing P/E near 17. You could decide to take profits out of fear that a correction might take hold, but it’s worth remembering that the company itself continues to execute admirably.

Norfolk Southern’s revenue is up 38% since 2009. In addition, the company increased its dividend more than 18% last year, and still carries a very comfortable 30% payout ratio. There’s more than enough room for Norfolk Southern to keep growing its profits, and in turn its dividend, at high rates going forward.

Put it all together, and the truth is that…

Timing doesn’t matter. While it’s certainly reasonable to sell a portion of your stock holdings if share prices suddenly soar and the underlying fundamentals aren’t keeping up, it’s almost never advisable to pull all your money out at once. There are a variety of good reasons to sell stocks, but it seems that ‘slight overvaluation’ is not one of them. Just because a stock’s P/E ratio has gone from, say, 15 to 18 times, doesn’t mean that it’s an automatic sell.

Unfortunately, nobody can predict the future, despite the best efforts of legions of investors who try to do just that every day. These stocks pump out reliable dividends every year, regardless of the swings in their share prices. Even better, they have demonstrated the ability to raise their dividends on an annual basis. Rather than worrying about the direction of the next few points of share price movement, sit back, reinvest those quarterly checks, and let Warren Buffett’s advice be your guide to a comfortable financial future.

The article Wisdom From Warren Buffett That is Especially Relevant Today originally appeared on Fool.com and is written by Robert Ciura.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.