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June 9, 2011
Edited: June 9, 2011
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Our current basket of dividend securities contains one energy oil and gas stock. That is Chevron (CVX). CVX will pay it's quarterly dividend payment tomorrow (Jun 10). It is the lowest paying yield of all the securities we own.
Of the dividend stocks we follow, we have a ranking system consisting of many variables and data elements. It is one of the highest ranking.
(1) CVX has paid a dividend not only for 99 straight years but has increased the dividend each year for the last 19 years with a 5-yr growth rate of 9.52%. It's fundamentals and capital positions are solid.
We currently prefer to buy into dividend stocks by ultilizing the Sell Put option feature. We do this only if we plan to own 100 or more shares of the equity. Otherwise we buy the shares outright with a limit order buy. If we are OK with possibly owning 100 or more shares of the stock, in lieu of placing a limit order to buy the shares, we place an option order to Sell Put at a given strike or assigned price. This lets someone pays us a premium dollar amount to possibly buy the stock at our requested price.
(2) Security rotation : MCD vs CLX
With our basket of dividend paying securiities, we are always on the outlook to replace a current hold with a stronger security. On May 3, we sold CLX at 67.13 and purchased McDonalds (MCD) at 78.94. We then tracked the performance of both from that point. CLX has dropped -.43 % since our closing while MCD has increased 2.80% since purchasing. At this point our stock rotation strategy is positive.
(3) FSC
FSC is a high yielding dividend paying stock. It is currently yielding over 10%. FSC is considered the best managed of the BDC stocks (Business Development Companies). It is currently nearing completion of an inverse cup-and-shoulders pattern. Support is at 11.42. Current stock price at the close yesterday was 11.66. I am recommending FSC as a buy at these levels. The stock currently has an influx of insider buying.
