lowtrade

[lowtrade]

NYMT is the reason I wanted to do a post on dividend stocks. Still have that on my to do list. But had to execute my plan for my divvy stocks today.

So those interested in dividend stocks, here's why and what I just did.

This post is not a basics post. It's a complex plan, once a play is chosen. I still need to post about basics. So I'm putting the horse in front of the cart.

But this is a template to help with how to play long term dividend investments. The basics post will help with picking a new play. This post helps with executing a plan. Every business needs a plan !!!

My individual investment plan is holding dividend stocks with over 10% dividend, at least, for 2 years and moving to the next one. Using 10% of my portfolio cash, for each dividend stock held. Locking in yearly gain %, reducing swing trading success rates needed to reach yearly business goal.
http://investorshub.advfn.com/boards/read_msg.aspx?message_id=105989862

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I've held and adjusted basis at NYMT since 2012. Buying dips to lower basis. Started at 6.66 and now held at 6.10. NYMT dividend is paid quarterly and I just got the last Q for 2014 into my account Oct.27th. Thus the dividend part of this investment is over. And NYMT has been on an un sustainable climb IMO since. So I felt it's time to take price profits and pick new divvy plays for 2015's business plan. Held NYMT & ARR as long dividend plays.

Been watching the climb at NYMT for the first sign of a reversal and today I got that red day signal. First day since the run after the Oct. last divvy pay date. So I took my 35% price gain over 2 years and 15% divvy for 2013 and 17% for 2014. Total investment for 2 years ended at 62%.
http://stockcharts.com/h-sc/ui?s=NYMT&p=D&yr=0&mn=3&dy=0&id=p58332738952

The plan for selling NYMT included moving that cash into my second dividend stock, which I started in 2013. ARR. ARR has a monthly dividend payout, with quarterly announcements. That means I have a locked in dividend to the end of the year there now.
http://www.dividendinvestor.com/historical.php?no=45231

ARR chart is at a stall, since my last buy op lowering my basis from 4.80 to 4.10, first week of Oct. So adding a large 10% of my portfolio (from closing NYMT) to ARR's price now, will bring my basis down lower for the last 2 guaranteed dividends Nov and Dec. Increasing my return to over 15% for this year. http://stockcharts.com/h-sc/ui?s=ARR&p=D&yr=0&mn=3&dy=0&id=p90569399620
Where I plan on selling and starting completely new in 2015. Plan was out of NYMT & ARR 2015.


PS; I have no idea why, but stockcharts charts on NYMT & ARR are not accurate. So for true price levels, I've been using Yahoo finance.
http://finance.yahoo.com/echarts?s=ARR+Interactive#
http://finance.yahoo.com/echarts?s=NYMT+Interactive#

At any rate my plan goal is to buy a large new position at ARR between 3.90 to 3.95, depending on what happens the next week there. Bringing my basis down to 4.00 or lower? That way, once I collect the last 2 month divvy. http://www.dividendinvestor.com/historical.php?no=45231
I should at least break even on the price action, since my June 10th 2013 entry. Maybe even a small gain, if price runs to end of year, after my new buying op move @ 3.90 hopefully. We'll see. But over all, I've collected 7% for 2013 (1/2 a year)and 15% for 2014 divvies. For a total investment gain of 22% @ ARR.

I know all this is difficult to understand and many readers won't take the time to research the numbers presented. But understanding the actions I've taken, will give one a good basic understanding how to increase total long term ROI while investing long in dividend stocks.

It's not just about picking the largest dividend return for entering a long term dividend play, It also includes the prior price action. As choosing the largest divvy can be washed out, when it's time to move on, if the stock price fall is equal to, or larger then the divvy received.

Example right now;
PER has a 30% divvy.
http://www.finviz.com/quote.ashx?t=PER&ty=c&ta=0&p=w

It's been increasing pay out for 3 years. 77%
http://www.finviz.com/quote.ashx?t=PER&ty=c&ta=0&p=w

But has eaten up a present 30% ROI in price decline the past 2 years. $17.70 Nov 2012 to Nov 2014 $8.62 or -50% price decline.
http://finance.yahoo.com/echarts?s=PER+Interactive#

So you end up with around 10% over a 2 year hold. 60% +/- in divvies and 50% decline in price. And since dividend paid is normally based on EPS, eventually they won't be able to maintain their dividend payout amount much longer. As their "this year" and "next year" EPS is falling -13% in next years projection.
http://www.finviz.com/quote.ashx?t=PER&ty=c&ta=0&p=w

This example shows choosing to buy/start a long dividend play in PER is not wise, even though your looking at a huge 30% dividend today.


As always; It's all in the plan and the plans numbers !