How well will these 10%+ dividend payers weather the debt crisis?

My entire portfolio is high dividend stocks right now. I don't have the time to second guess the Russian Roulette being played by Republicans in congress who would rather destroy the worlds largest economy than pay more taxes, and as a result the market is simply too volatile for my usual style of swing trades to work.

Here is the breakdown of my current dividend only Portfolio

CMO (finance) - currently paying 14.5% 

NLY  (finance) - currently paying 14.87%

AGD - (Global Dividend Fund) - currently paying 10.17%

AOD - (Global Dividend Fund) - currently paying  11.32%

CPLP - (Supertankers) - currently paying 11.44% 

My income portfolio is fairly diversified, but did get hammered in the last week, so I was glad to see the recovery today. Look at this graph of the bounce back from the last weeks vicious drop.

AGD Dividend paid 6c 6.7% pa at current price

AGD Dividend paid 6c 9.3% pa at current price

AGD Dividend paid 6c 9.3% pa at current price

AGD Monthly Dividend paid 0.6c 9% yield at current price, and 20% gain in 4 months

(via COMTEX News Network)--

SmarTrend identified an Uptrend for Alpine Global Dynamic Dividend (NYSE: AGD) on October 07, 2010 at $6.67. In approximately 4 months, Alpine Global Dynamic Dividend has returned 20.3% as of today's recent price of $8.02.

In the past 52 weeks, shares of Alpine Global Dynamic Dividend have traded between a low of $5.62 and a high of $11.94 and are now at $8.02, which is 43% above that low price.

Alpine Global Dynamic Dividend is currently above its 50-day moving average of $7.46 and above its 200-day moving average of $7.44. Look for these moving averages to climb to confirm the company's upward momentum.

In the last five trading sessions, the 50-day MA has climbed 0.7% while the 200-day MA has slid 0.72%.

SmarTrend will continue to scan these moving averages and a number of other proprietary indicators for any shifts in the trajectory of Alpine Global Dynamic Dividend shares.

Read more: http://www.benzinga.com/press-releases/11/01/c811288/alpine-global-dynamic-dividend-the-trend-continues-up-agd#ixzz1Cid2QWIR

AGD Monthly + Special Dividend 20c 14.1% p/a yield at current price

AGD Monthly Dividend paid 0.6c 14.4% yield at current price

AGD Monthly Dividend paid 0.6c 14.9% yield at current price

AGD paid 6c monthly 11% p/a yield at current price

AGD monthly dividend 12c - 16% p/a at current price

Rebought too early for AGD as well, but with the lower price, dividend reinvestment will incease the rate of share accumulation.

Income Portfolio Analysis

The next few months are going to provide an excellent test of the Daily Income for Life trading and investing strategy.

After I dump my last remaining Active Trading (NOK, TNP) and underperforming income positions (AWP) tomorrow to stem further losses, I will only have income stocks remaining. I'm shorting one tech stock (HXL), but am not attached to the result. Catching it's correction might for a small gain might just make me feel better that I sold my HXL position too early back in April at 20% profit in a month rather than 60% gain in three months I could have made.

Left in the Income Portfolio
AGD
AOD
CPLP
FTR
AGNC
NLY

These stocks are all paying between 10% - 23% in dividends. The income stocks that were yeilding less than 10% were sold to realize capital gains from the last 14 month bull market.

Currently, only FTR does not have unrealised losses after the panic market correction and spiking volatility we saw in the last three weeks. However, because of the high yields,  if I hold these positions long enough they will all turn around eventually and continue to provide long term dividend reinvestment.
As the prices decline further before we reach a stable bottom, the yields relative to price actually will increase. Also, dividend reinvestment will purchase more shares. This should position the Income Porfolio to gain healthily if this correction rebounds. These stocks were all purchases with the long term investment and dividend reinvestment in mind. Gains that were taken were based on the recent bull market and technical analysis providing solid reasons to exit.

The real question is, what will happen after this correction? Commentary is all over the map right now. The only sure thing is that trust in the entire financial system will sink to yet another low after the two shocking down days in the last two weeks.

Trying to feel better about losing 3.4% of entire portfolio value in one day today.

In the spirit of 'I did do something right in the last six months...' with links to the posts to prove it. Why does this feel like a desparate attempt to cheer myself up...Because it is, dammit. Today was a nightmare.

Sold O at $32.79 for 41% gain  Today O is trading at $28.89.

Closed INTC at $24 for 46% gain Today INTC is trading at $20.77.

Closed 30% of AGD at $11.79 with 80% gain  Today AGD is trading at $8.10

Closed BPT at $99  at 41% gain Today BPT is trading at $88.

Closed HXL at $13.50 for 20% gain in less than 1 month

ADG buying back in long at $9.25 into income positon.

Executed as planned in my May 9 post, buyback of the shares I sold at $11.26, on May 14.

Here is what I said in my original post when I sold AGD at $11.26 on April 14.

" My AGD re-entry point is $9.25, although I'll fine tune that based on how things go. I'll be looking for similar pattern as the left of the graph for reintry - Red line above green, red candles turning to green, all candles below the green. A Doji or two to signal the market has beaten AGD down enough again.I'll probably have to wait 2-3 months for this reentry point. "

By buying back the same number of shares as I sold, I effectively I effectively boosted the capital appreciation on 30% of my AGD position by $2 per share by sacrificing one month of income while timing the market. Thank you you Greece for this opportunity to benefit from your malaise.

So, I did exactly what I had planned, with under a month turnaround of this strategy. Now it's time to hold this stock and collect those monthly dividends again.

If I had been even more confident, I would have shorted the down trend. My technical analysis skills and intuition are not that good yet, which is why I enrolled in the Online Trading Academy Professional Trader seminar.  

Of course, there is the likelyhood that ADG goes lower. You can see I bought in a downtrend that hasn't necessarily shown a reversal, with the small green candle appearing on May 15th probably being  more about exhausted sellers than confirmed buyers. Ironically, the last green candle on the chart was a  a terrible day in the markets and also a 1% loss for my portfolio overall.  However, I wasn't looking short term with this trade, although I did want to sneak in before May 15th, which is when you have to own this stock to get paid at the end of the month.

The real reason I'm in AGD is because it plays 11c per share every month - about 14 % per annumn. I'm willing to take some downside risk because that 14% dividend covers some of that risk. Also, because I'm cost averaging the reinvested income every month, if it drops down a bit, I'm reinvesting at a lower cost. Which in turn increases the payback if the stock rises to the level where technical analysis tells me that the capital gains are a safer bet than waiting on dividend checks.

Happy investing

Executed increase in AOD Long at $8 for monthly dividend income

Executed increase in my AOD income portfolio at $8 on Friday, as posted last week after the Thursday meltdown.  While the state of the market makes me extremely nervous right now, this is strictly an income play, as AOD is currently paying 18% p/a. As AOD pays it's monthly dividend based on your holdings on the 15th, timing was quite important. Hopefully I just sneaked in to paid at the end of this month on the new position.

For these income stocks, especially if they pay monthly, its a game between taking capital gains if the gains exceed your income reinvestment potential (like I did with AGD, where I wanted to take 80% profits from some of my initial investment off the table), and the long term ability of dividend reinvestment to outperform the market over the longer term.
If your technical analysis skills are good, you should be able to find a balance between taking short term swing or position trading profits, and long term dividend gains to increase the total p/a return into the 20 - 30% p/a range.

I easily did that with AGD, but had the advantage of getting in near the bottom of the 2009 market collapse.

Whether I can still do it with AOD will largely depend on what the market does next.

AGD Buyback opportunity after the market hammering

Wow! Am I glad I sold 30% of my favorite monthly income stock AGD (See earlier post, sold at the highest price in the last 18months.

Here is what I said I would do in the earlier post": " My AGD re-entry point is $9.25, although I'll fine tune that based on how things go. I'll be looking for similar pattern as the left of the graph for reintry - Red line above green, red candles turning to green, all candles below the green. A Doji or two to signal the market has beaten AGD down enough again.I'll probably have to wait 2-3 months for this reentry point. "
The recent market hammering because of the Goldman-Greece-Euro hysteria whacked the price down to below my buy point of $9.25. I'll wait to see if there is any permanent downtrend here, but look for a reentry at $9.00, instead of the $9.25 that I thought it would reach. I'm also only having to wait a month, rather than the 2-3 months I predicted. So I only lose out on one month of AGD dividend if I get in before the 15th. (AGD pays monthly, at the end of the month, based on your holding on the 15th).

ADG is a closed end fund, which according to the experts, often means it trades above Net Asset Value (NAV). In theory, this means it can be hit harder than other stocks by retrenchments, but it also means it may bounce back quickly.

Taking capital gains in income funds is part of our strategy at Daily Income for Life, although buying AGD was done originally for the pure income potential.   At $9.25, AGD pays 14% p/a, which is not as good as it my initial purchase of AGD when it was paying 26% p/a, but its still a healthy income ETF to own.

In todays market, with even the stock exchanges uncertain whose computers screwed up to cause Thursdays panic, buy and hold is appears to be a completely outdated way to be in the market. By buying mainly dividend stocks that pay 10% p/a, we are hedging market volatility to a certain extent.  Reinvesting the dividend month  helps cost average out the price of the shares you own. 

Sold O at $32.79 for 41% total gain

O was the income stock that started my income portfolio in 2008. O pays income monthly, at around 6% pa. It's had a long ride upwards after I started investing in 2008, bought more in 2009, and reinvested all dividends.

My call was that a 41% gain in total over about 18 months is better than 6% compounding over the same time. Althouth Daily Income for Life is about finding income producing stocks, the trading strategy is also a three prong approach:

1. Using 75% of the portfolio, buy stocks that pay 10%+ dividend or royalty yeilds and reinvest all dividends/royalties.
2. Take capital gains income stocks and reinvest using technical analysis to accelerate capital appreciation
3. Actively trade small and medium cap stocks with up to 25% of overall portfolio value in order and direct capital gains into additional income streams.

O Exit Point Grapsh, show the nice long run. Too good not to take profits.

It's going back on the income watchlist, but my gut is telling me this latest rally is coming to an end, so I'm converting this position to cash to see if my intuition is right.

It's better to be sitting on cash at the end of a rally, and have all your positions being taken out by your trailing stops, than cursing yourself watching the graphs fall and your profits erode day by day.

However, the Daily Income for Life strategy needs to stay invested in dividend and royalty producing stocks to work. I'll be watching the market carefully using technical analysis to see where to reinvest - either in the same income producing stocks as were sold in the last month (BPT, AGD, O) or in new ones (Income Watchlist)

Even if the O pullback after this rally is only $2 per share, it will still be worth buying back in. Let's say our position size is 100 shares of O. The buy back price in two months is $30 after Greece is solvent again and Goldman execs are rightlully dragged through the mud.

The cost of lost dividends and exit-reentry commission would be about $32. So we are $200 - $32 ahead through actively managing our income investment using technical analysis. This is $168 cash. Tt would have taken approximately 20 months of dividend income to create this profit.

And if O keeps going up, we just pick another stock on our income watchlist that is looking better from a technical point of view.

AGD Exit 30% of income position at $11.79 with around 80% profit p/a

AGD has been my favorite dividend reinvestment vehicle of 2009-2010. The profit on this trade was 80% return on original capital investment. I'm exiting about a third of the position, with the target to buy in again with the same amount of cash at a lower price. Thus missing a month or two of dividends, but buying back more shares than would have got by just reinvesting the dividends. It's a really a strategy to accelerate dividend reinvestment by swing trading.

This is a key part of the Daily Income for Life concept. It's very active investing, using technical analysis to try and make trading profits on our investment vehicles when technical analyis shows those profits are there for the taking. Not too greedy, but not asleep at the wheel either.

My investment in AGD outperformed  the Dow Jones by 16%, even despite one of the Dows biggest rallys of the last decade. And I entered AGD before the March 2009 bottom.

Note: I updated the graph two days after updating this post. Notice the t shaped candle (Doji)  on the 14th, the day I sold.

My AGD re-entry point is $9.25, although I'll fine tune that based on how things go. I'll be looking for similar pattern as the left of the graph for reintry - Red line above green, red candles turning to green, all candles below the green. A Doji or two to signal the market has beaten AGD down enough again.I'll probably have to wait 2-3 months for this reentry point.