Swing trade dividend stocks
Income investors who have discovered the small sector of Business Development Companies BDC know that many of these stocks pay steady dividends with very attractive yields. I have found that the combination of a higher yield plus stable and predictable dividends often produces short term share price swings that are also quite predictable.
The dividend swing strategy is one of several strategies used to find the low risk trade opportunities recommended in our 30 Day Dividends newsletter. To start, you need to set up a tracking system to include the BDCs that have stable dividend policies and pay quarterly.
Swing Trading with Dividend Stocks - Part 1 Introduction | Swing Trading : Dividend Geek
This trade does not work well with the monthly dividend payers. Here is the list of BDCs which have the basic requirements to employ the strategy:. The fundamentals behind the strategy depend on how traders treat high-yield dividend stocks.
Group psychology and some trading strategies increase buying interest as a dividend payment approaches and that reverses to selling pressure after the stock goes ex-dividend and the dividend earnings are locked in for share owners. As a result of these mass buying and selling decisions, the share price will often drop in the first few weeks after a stock goes ex-dividend and then start recovering in value to reach a peak in the week or so before the next dividend date.
How to Swing trade Dividend Stocks? | Online Traders' Forum
These are the date ranges you need to pay most attention to. For the BDCs you have selected, watch the share price after the stock goes ex-dividend. This low will usually occur within the first three weeks after the ex-dividend date. The entry is flexible and you need to develop a feel for when the share price has bottomed, but the best day to buy is often the one when the share price makes a relatively big drop during a single trading session.
Sell when the target price is reached, or, as an alternative, if the share price runs up through your target early, set the target as a stop-loss to lock in the gain and give tools of the trade belgique stockpot stock time to add to the gain as the ex-dividend date approaches. In all cases — unless you want to change to a buy-and-hold position for the BDC — sell no stock market charting bbc bitesize than the day before total money makeover audiobook youtube next ex-dividend date.
This data will help you fine tune your entry timing and where to set your profit target. Since the set-up does not appear every quarter with every BDC, you need to watch a handful — we currently track a half dozen BDC stocks, plus others, for 30 Day Dividends — to provide yourself with one or two good entries every quarter. This strategy has a very high probability of not losing money. Which brings up the most important detail of this strategy: The entry drives the profit.
You need to buy when the share price drops after the ex-dividend date. No price drop, no entry.
Move swing trade dividend stocks the stop-loss after you have a gain in the share price and then watch for your profit goal or the next ex-dividend date.
The final point to remember is that the BDC share prices can stagnate for a significant portion of the 3 months between dividend dates.
You may end up waiting for two months after an entry before the rest of the market gets the clue that a dividend payment is pending and drive up the share price.
This means that if you do not get an entry price soon after the ex-dividend date, keep an eye on your list of trading BDCs and a late entry opportunity may present itself. That was a great feeling to have a double digit winner in such a short time without having to risk it in small caps, emerging markets, options or other places usually the reserve for quick gains.
You don't want to miss this opportunity for a steady, consistent stream of income from stable dividend paying stocks.
Click here to read the transcript or here to exit. Wednesday, June 21, Menu Home Members Login Premium Newsletters Contact Help About Free Reports SUBSCRIBE NOW. Home Members Login Premium Newsletters Contact Help About Free Reports SUBSCRIBE NOW. Swing Trading Strategy for Double Digit Dividend Stock Profits Dividend Investing July 9, 8: Here is the list of BDCs which have the basic requirements to employ the strategy: TCAP The fundamentals behind the strategy depend on how traders treat high-yield dividend stocks.
Tim Plaehn Tim Plaehn is the lead investment research analyst for income and dividend investing at Investors Alley. He is the editor for The Dividend Hunter, an investment advisory delivering income investments with double digit growth in share price and dividend payments, and 30 Day Dividends, a specialty income service that takes advantage of opportunities for relatively fast, attractive profits around potential dividend payouts.
Prior to his work with Investors Alley, Tim was a stock broker, a Certified Financial Planner, and F Fighter pilot and instructor with the United States Air Force. During his time in the service he was stationed at various military locations in the U. Tim graduated from the United States Air Force Academy with a degree in mathematics. Learn about Tim's new investment strategy for collecting income from the market each and every month without the use of options, futures, forex, covered calls, or risky trading strategies.
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