This is a question that seems to still confound some stock holders who hold for the dividend. I say you have LOST money by holding. What say you? Am I confused?
This is all short term discussion. Of course a loss in the short term. But the big div was necessary because WMC was earning much more than the .80/.90 divvy it was paying out; even while rates were rising and BV was falling. IMO, WMC will continue to be a good earner/divvy payer and eventually appreciate. Meanwhile, you get over 20% to wait. Also: hindsight is always 20/20. Good long term buy, but it may dip lower before it goes back up.
No one makes money on a buy and hold dividend stock unless their entry PPS is substantially lower than the current PPS ex dividend date. Those that bought at $22, $20, $18, $16 will probably never recover unless the REIT market surges, which is not likely anytime soon. Those that got in around the 52 week low of $14.55 are the only ones cashing in now.
If you bought a small amount at $16 and wait for $14.50 or less to double (or triple) down, you end up at about $15.25 or less. If WMC continues to perform reasonably well, your chances of recovery are pretty good and you can continue to get a good dividend.
If mortgage REITs all go bad and WMC messes up, it will go badly. I do not see a reason to panic sell and take losses just yet.
why is this a source of confusion? simply look at the yield quoted today of above 62%/
that means that, if you bought at some point in the past year and held for the divis and continue
to hold, you are looking at a yield of 62 %. this seems self evident to me. the timing of your
getting into the ring, however, will impact your personal yield over the course of the year.
but, if you bought and held and took the divis and re-invested, you will look at a yield of 62 %
for crying out loud. i put about 59K into WMC back in the Fall and took the divi today and
am now looking at a bottom line (my WMC is in an IRA) of 65K plus. the way i see it I am in
the plus column despite the very low pps today. that pps will climb from what it is today
and so will my bottom line.
Let's see where it trades up or down to in the next week or two. Then we can make a better decision on what was made net of the dividend. Obviously anyone in REIT's with very few exceptions (CIM) have got hammered over the last year.
Question I am trying to find someone who knows, if you held to EX and took the $2.35 with the stock adjusting to $14.87 did you make money? Make it more easy, you take the $2.35 and sell on open $14.87. Make money, lose money, or zero net. Let's say you sold on the close 12/24/13 and bought back on the open today (PPS same) are you ahead more than the guy who held through EX or the same, less, what?