Wednesday, April 6, 2011

Trying for more dividend

I have been watching for some more high dividend entries. ARCC and AINV have gone well, and it is nice to get the monstrous check when the >%10 (annualized) divvy comes out.

It seems that many retail traders ignore the price on these, shop for them by yield, and think as long as they don't sell, they will just be collecting the dividend. I don't agree with that, and trade them on price action alone, hoping for equity gain as a cushion before I think of letting it go and let the checks come in.

I am slowly building this portfolio. These can really blow up in your face. Look at the long term charts. It does not mean much if you are collecting 10% but have lost 20% in equity. Once you get a couple and can put in a break even stop loss a few points below current price you can start adding more. It's a great way to park cash (once you are safely in with a cushion) and get some good return in a low return environment. Even if ultimately you get stopped out at break even, you made a good return while your cash was tied up.

The REIT's have been issuing more shares, so that is a potential land mine to look out for. You can limit buys to those with recent issues. Also pay attention to when the dividend dates are, as the stocks normally take a big gap down on these, and sometime slip even more. I like to buy a week or more after, and not close before, to see how things shake out.

With ARCC, it has been tough to look at the equity gain, and just sit back and take the check without taking profit, and exposing yourself to a round trip and getting stopped out. My solution for this is to buy double size and scale some out on the way up, so I can scratch the profit itch, and also reap the dividend.

I am no dividend stock wizard, so if there is some angle I am missing... let me know!

Here is a list to work off of, stocks yielding >10% and trading over 400k shares average per day:
get me div!

On watch are IVR (~17%!!!), ANH , BGY, among just a couple others. I was in PSEC but got bumped out and it has since run up (bummer, this one pays monthly!). I go over the charts of these every month or so to see how things are coming along. Can't remember the last time I saw a screaming technical setup. You just have to kind of find what you can get, really a reason to get in with a clear stop, as most of these charts are choppy ugly or slow steady movers one way or another. My ARCC and AINV entries were resistance breakouts within a range, and did retrace a bit, so I do give them more room and time than most things I trade.

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