lowtrade

[lowtrade]

That was an old post, wow, you doing homework!

With dividend stocks you are buying and holding them for the dividend income. NOT and price gain or loss. Gain isn't meaningful because you have no intension to sell. On the other hand when price falls it gives an opportunity to buy more and increase your overall ROI. Basically the lower the price the larger the dividend gain, with a steady distribution. Distribution is the declared dividend price.

Say you hold a divvy stock at $5.00 which is called your basis. And the Q dividend is $.25 or $1 per year. That works out to receiving a 20% ROI dividend. $1.00 /$5.00 = .20

Now say a year goes buy and the payout of $.25 remains the same but the price is now $2.50. If you just entered the ROI would be 40%.

In a case like that you can buy more low and lower your basis, thus increasing you return. It's just math.

Say you had 100 shares @ $5.00 basis. And you buy another 100 shares at $2.50. Your basis went from $5.00 to $3.75. The payout @ $.25 starts giving you 27% return, instead of your old basis gain of 20%.

If your business plan includes a steady income stream, I recommend buying a diversified or residential REIT. They give the highest return around. I've held CIM, TWO, and now NYMT over the years. And usually hold them until there is a new leader offering a much higher return then the one I'm in.

residential
http://www.finviz.com/screener.ashx?v=161&f=ind_reitresidential&o=-dividendyield

diversified
http://www.finviz.com/screener.ashx?v=161&f=ind_reitdiversified&o=-dividendyield