When I got seriously interested in dividend investing about two years back, that was pretty much all the type of trading I did. I muddled through how these things moved and paid out, weighed the tax advantages, and so on. A lot of times I took small losses or broke even capturing the payouts because I wanted to move on to the next figuring that over time (I’m 33) I would recoup whatever losses I incurred now as the payouts were automatically re-invested.
I have a relatively small portfolio which I manage myself outside of my IRA and my 401k at work, so I was (and still remain) cautious with what cash I do have. This past year was absolutely nuts and I figure I was lucky to end the year down about 1.45% after I factored in the dividends I did receive.
All this is to say, about 7-8 months ago when the market started gyrating hundreds of points inter-day, I thought to myself if I could time it right I could capture dividends and profits by grabbing up a position in a stock the day or two before the ex-date provided that the fundamentals bore out that the fact that the stock was being unfairly punished because of world events. The first example I booked using this strategy was LOW about 7 months ago.
In the last week I booked both gains and the dividend in JCP (although not as big as that could have been because I took profit several times as that one rose) and ETH. Both of these stocks were punished the day before the ex-date and both rose above offset price of the dividend on the day of the payout. JCP admittedly was a bit of a gamble because they sorely missed earnings, but ETH seemed to me like a better play given they are a high end furniture business and if housing turns around they will probably benefit.
I use the dividend calendar below for a list of names to start with:
http://www.thestreet.com/dividends/index.html
Then I take this list of names and look for what I think are technically favorable charts.
I’m new to technical analysis, but I think I am catching on. Given my level of understanding I decided to share because personally I think it looks good so far to me and the level of risk I am willing to accept. If this site is about anything in my view it is sharing ideas, so there you go. 🙂 I would further say that I am not going to apply this strategy unless I am fairly certain about what I see on the charts and I will wait until the market has down days before I try. If I find a bullish uptrend or reversal I will jump in.
Use it if you can, lambast me if you will, but there you have it 🙂
Let’s go Patriots!!
