Stock Market Dynamic Dividends Investing
Companies / Dividends Nov 29, 2009 - 09:34 PM GMTBy: Jay_DeVincentis
Dividend stocks have the potential to grow both in stock price and with their dividend payout.
Market Commentary:
For a shortened, light volume post holiday trade, Friday was anything but unexciting. Seasonally, our bullish period ends on Monday for about 1-2 weeks and then resumes for the rest of the year. Something to consider for your yearend trading..
Here's our weekly pick, from our Dividend list:
Dividend paying stocks are usually found in the various utility industries, real estate operations, financial services, and other sectors or industry groups. They offer the unique potential for income while holding for capital appreciation. What is better than being paid to hold on to a stock for the long term?
Regretfully, most investors are sucked into the high risk game of trading high beta stocks looking for the Holy Grail. There are times when high beta stocks are great to own, but there are also times when they will lose a significant portion of their value. I believe that slow and steady wins the race - and dividend stocks give you the best of both worlds.
As a technician, most stock charts normally don't show a dividend. But it shows the effect of dividends. There are periodically stocks that pay huge one-time dividends. The problem with this is that the stock will usually drop by the amount of the dividend payout. So what you make on the dividend, you lose on the stock value.
Trading dividend stocks just for the dividend makes little sense. The key with dividend stocks is to own the stock while it is going higher and get paid a dividend all the while. A stock can go down much lower than its dividend payout. So there is no sense in holding a stock for a 12% payout, when its price has dropped 50%. No sense.
As a market technician, there are good times in the market cycle to be buying dividends and bad times. However, in long term investing, you can reduce the impact of market timing by making frequent, equally timed investments or trades. What matters most is getting in good positions with good potential for long term growth as well as a solid dividend.
I'm not as big of a fan of just searching for companies that are growing their dividends. Their dividends tend to be lower than you can find with a little work on your own.
We like smaller dividend paying stocks whose stocks are in up trends and applying an intermediate term trading approach. The reason being is that we also want to make a big chunk of our money from stock appreciation. Not just from the dividend while holding the stock.
You want to go where the relative strength is - so you can grab onto a stock that is likely in an uptrend and also more likely to remain in that uptrend. I won't bore you by regurgitating a bunch of financial information that you could readily find for free on Yahoo.
What follows is a list of Dividend Paying Stocks for consideration by you, the investor/trader too include in your portfolio, whether as a long term investment or a short term swing, trend or break out trade. No matter how you play it, I recommend the use of stops set at 1/3 of your profit objective below your entry. And by no means should you risk losing more than 8-10% on a trade. This week’s list is sorted by Price - as low priced stock dividends can be very suspect...
As an alternative investment strategy, I would suggest my Triangle of Wealth investment methodology. Please advise if you're interested in learning more.
If you have any questions or comments, email me at Jay@stockbarometer.com.
Regards,
By Jay DeVincentis
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