lowtrade

[lowtrade]

A post about dividend investing:
Actually I've been re-evaluating NYMT. I've held it for a little over a year and a half this time and feel there are more reliable REIT's out there now. Business performance has been luke warm and they lowered their divvy again, last Q payout. The last one was Sept of 2015.

I'm in the process of switching from NYMT to ORC. The trick is timing an exit when NYMT reverses it's retrace and tops out on a new climb while ORC's retrace bottoms.

With dividend stocks it's nice to sell at or above your basis. And enter your new choice at a buying opportunity. When a retrace bottom is seen. Not always in the cards. but that's the goal with a switch.

If your just entering for the first time. Find a good divvy stock at it's lowest price possible. Because this gives you a low basis point for the future returns of their dividend payouts.

Remember it's a different game then trading stocks where you get profits from price increases. Your after the largest divvy ROI and that comes from your basis point (the price you hold the stock) VS the historical payout. You don't care about price runs or walk downs, while holding long term. Because you profits come from the dividend payout vs. your basis.

Example: ORC; you bought in and hold at $10.39 (todays price) and the monthly payout is 14 cents. (has been since July 2015) Your gain is .0135 per monthly payout or 16.2% yearly. (.14 payout / 10.39 basis)

Now say the price runs to $11.50 with the same 14 cent payout. The return gain would be .012 x 12 or 14.6%. At that price level but you hold at $10.39; so while the gain lowers from your 16.2% yearly to 14.6% for new entries. Your still pulling in 16%.

If the price dives to say $8.00 the figures move to .0175 monthly or 21% yearly. Your still getting 16%.

This shows you want to get in as low as possible, as long as the stock has a stable history of payout over a long period of time. And when price dives it's an opportunity to add and lower your basis, thus increase you gain over time.

Every time a dividend plays price retraces below your Basis holding point. You should consider and workout how far adding will help lower your basis. Thus increasing you long term ROI.

The whole key is the longer the payout isn't lowered. The better the stocks reliability. And the more often the stock increases the payout the better also.

You can find this info here: https://www.dividendinvestor.com/
Enter the symbol, then scroll down to "dividends paid since" and click for history of payouts.

Here's ORC history; https://www.dividendinvestor.com/dividend-paid-since/?no=611191

To rap this up I'll say; everyone who intends to play the stock market game, should have a business plan including a portion of their investment cash in a known income factor. And holding a known 15% REIT will double your cash every 5 years using a DRIP (dividend reinvestment plan) That's why I shoot for 15% and switch only when my 15% seems in jeopardy. Knowing you'll double you cash investment every 5 years no matter what happens with your trading success is a comfort long term.