lowtrade

[lowtrade]

Been thinking about doing a post about dividend investment again. While evaluating my choices, NYMT & ARR, I noticed something which deserves close watching on my part. Giving me a perfect opportunity to discuss dividend stocks. The general subject is easy to understand, but later in the post the required investment actions may be harder to understand. It's a long post and IMO will help those wanting to learn dividend investing. Because investing does not mean hold for ever.

In this world of wage earners vs. profit earners, the rich profit earners are far and away out preforming in the USA. This is why I spend so much time trying to teach wage earners to become profit earners, trading the markets. And dividend stocks should be the meat & potatoes of every little guy portfolio IMO.

You should have at least one good long term holding, giving a reliable income, long term. I recommend REIT's for this. As they produce the largest dividends and run/retraces, for basis rebalancing. Pulling in 15% yearly in many cases.

In the environment the US has been in, since and before the banks blew up the economy. Derivative trading continues to make the rich richer. And CMBS, RMBS, swaps, assets hedged derivatives, repos hedged derivatives, Agency ARMs, Hybrid ARMs are still being used for this purpose. Property REITs invest in these financial products, allowing the little guy to play the big guy games.

Since the 10 year bond continues to fall to the expected bottom of 2.5%, REITs with a 15% yearly return is very attractive. And the option to hold a monthly and or quarterly income producer can build wealth quicker threw compounding. (re-investing dividends back). Ps; monthly dividend stock increase compounding, thus over all long term wealth. So if you have 2 REITs with the same ROI pick the monthly over the quarterly.

But all investments need attention event REITs. Moving out of holdings which have weak Q reports and/or reversing mid term chart patterns and buying stronger, both fundamentally & chart wise, will also increase wealth, just like Quarterly/monthly compounding choices.

My monthly dividend stock ARR is in this place. The chart is walking out of a rising wedge and may retrace after their resent weak Q report. So I started looking for a possible replacement. And event though it's a quarterly REIT like my NYMT, which I also own CYS's Q report is strengthening. So It's on my strong watch list for entry, as ARR is on strong watch for exit. ARR Timed right, I'll get a nice price gain from my basis if exited. And CYS timed right, I'll get a better basis point for entry @ retrace bounce, then entering now at highs. Both ARR & CYS have 14.5% dividends right now.

CYS also has a rising wedge which is part of the reason I chose it. If the timing works. ARR will retrace, I can exit and CYS will start walking out of the rising wedge and retrace for a buying op just after. The main difference is CYS is getting stronger and ARR weaker, mid term. So ARR should continue to retrace, but CYS should bounce and climb again. Give a buying opp!

This comes from the research involved in the company financials and fundamental needed for long term investment. Unlike swing trading the chart, investing requires some prediction, based on future strength vs. weakness based on changing fundamentals. And comparing ARR & CYS, fundamentally and technically. CYS has the best looking mid term future. So a switch may be required shortly.

See what I mean when I say you even investments need attention. I am always checking for weakness and opportunities.