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Trading Notes: When the Blue Chips are Down, Invest in High Dividend Yield Stocks!

I confess that my last post about investing and creativity bordered on the slightly frivolous and fancy-free, but after all, I do feel I am a creative person as opposed to an analytical person, but I still do have some analytical “chops” if you will.

It’s hard to be playful when the stock market is tanking and you’re losing money and need to sell stocks to cut your losses, but that seems to have been the reality these past few months when it came to the stock market.

August and September (at least in my point of view) was a somewhat choppy period. I confess I had to sell stocks I just bought positions in and sell them quickly to cut my losses and avoid losing a lot of money in the process. Looking at my spreadsheets now, it was a sound idea… sometimes you need to sell stocks when you think it’s going to downtrend and there’s a good chance it’ll stay down for a while.

Revisiting the Facebook Debacle

Facebook ($FB) was a good example. I invested twice, right when the IPO launched and I was at $32 a share. And, I could see in the technical charts that there was room for the stock to go down further. I sold at $30 a share and didn’t lose too much money. I bought the stock again at around $22 a share and once again it started tanking, and sold at around $20 a share. Right now the stock is hovering in the lower 20s. I’ll be honest. Facebook is a great company with 1 billion users, and I’m with Warren Buffett, I don’t really understand how the company is going to continue to make money unless they really take advantage of mobile advertising, and still, even if they did how are they going to properly monetize the social networking site to make the shareholders happy in the long run?

So, stock investing has its risks, and you just have to weigh the amount of calculated risk you are willing to endure when investing in a stock.

With regards to Facebook ($FB), I personally wouldn’t touch it with a ten foot pole at this point, but, I continue to follow the stock and will invest if I see the technicals looking better.

Incidentally, Facebook stock offers zero dividends!

High Dividend Stocks

There are a few good reasons to invest in high dividend stocks:

  • When the stock market is going sideways or is bearish.
  • It increase earnings per share.
  • To maximize a stock portfolio’s profits.

Anyway, I believe that at least half of your portfolio should be high yield, high dividend stocks. This is where you earn income in addition to earning more per share as the price of your stock increases.

2 Portfolio Stocks with High Dividend Yield

Hypothetically, let’s just say you invested in a 1 thousand shares of any given stock (definitely something I’m not capable of doing, but wishful thinking, nonetheless).

The Western Sage Equity Fund has the following high-yield dividend stocks:

American Capital Agency Corporation ($AGNC)

Sector: REIT (Real Estate Investment Trust)
Last Price: $32.00
52-Week High: $36.77
52-Week Low: $27.07

Description:

American Capital Agency Corp. ($AGNC) is a real estate investment trust (REIT). The Company earns income primarily from investing on a leveraged basis in agency mortgage-backed securities.

Yearly Dividend Earnings

1000 Shares
$5.00 Annual Dividend per Share
———————
$5,000 Dividend Earnings
$32,000 Total Balance of Shares

National Grid PLC ($NGG)

Sector: Utilities
Last Price: $56.61
52-Week High: $56.97
52-Week Low: $46.49

Description:

National Grid Plc is an international electricity and gas company. The Company’s segments include UK Transmission, UK Gas Distribution, US Regulated and Other activities. The Company owns the electricity transmission system in England and Wales and is the national electricity transmission system operator, responsible for both the England and Wales transmission system, and the two high voltage transmission networks in Scotland, which the Company does not own.

Yearly Dividend Earnings

1000 Shares
$4.03 Annual Dividend per Share
———————
$4,030 Dividend Earnings
$56,610 Total Balance of Shares

Summary

These 2 stocks alone will generate $9,030 dollars of dividend income per year, providing they continue with their current dividend offerings.

$NGG dishes out the dividends twice a year, I believe. $AGNC dishes out the dividends quarterly.

But this is with a total investment (based on current stock price) of $88,610.

Yet, $9,030 a year in dividend earnings is a great source of passive income. Letting your money work for you.



About the author:
Has 3153 Articles

Carlos Rull is a musician living in the San Diego area. His interests include Yoga, Eastern Philosophy, Zen Buddhism, and Gardening. He plays drums, piano, and composes New Age & Ambient music, and his albums are available on iTunes and Amazon.com.

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