I have about $100k on the sidelines from selling my house 4 yrs ago. Been playing it safe, NOW i need income from my cash. I plan on choosing 10 stocks with divs to avg over 10%.
1. Am I too late for the party - rates are moving up
2. is there a better way to get over 10%?
i am 45, single, 2 kids and underemployed, renting in CA in an great but expensive town.
Check out AGNC and MTGE ,if you like what you see, buy after they report 2/7,2/11.Once they report we will know if the 15% dividend is safe for this year. AGNC has a great MB and a lot of experienced traders who will answer any ? you might have.These 2 REITS are known to have flash crashes that they quickly recover from ,a lot of traders have GTC orders on them to take advantage of this.
If you're risk tolerant check out CVRR,a recent IPO associated with Carl Icon a man known for making money,it has a lot of insiders buying shares always a good sign.
Forgive me for speaking bluently, based on ur description of ur current financial conditions, u absolutely have no business in chasing high dividend stocks when the recent market had reached the high of 2007. U did remember what happened in 2008? U be much better off using the 100k for downpayment for an affordable house or moving to a state with cheaper housing. However, I believe u had already made up ur mind n I can only wish u luck because in 1 to 2 years u will need it.
I would also add that diversification is for everyone. Spread your money out over your best ideas. The risk of a single stock dropping 50% is too great to ignore and too hard to recover from. You've already put 20% of your extra cash into one stock. There are many other opportunities as good as PSEC. There is solid arithmetic that shows diversification can increase return and reduce risk. It is the only free lunch.
Go to Seeking Alpha and read the Nov. 9 transcript from 1Q 2013 earnings call. My take on PSEC is this - mgmt has repeatedly said that they want a stable and growing dividend. The dividend was just increased 8% to $0.11/month. They would not have increased it if they were not sure it was maintainable and growable. They have gone to great pains to communicate their commitment to their stated strategy. A pullback in the dividend would be a disaster to the stock price. So, the yield is 11.67%, today, and I believe that they are good for it. Look at the price they are paying for capital (less than 6%) and their opportunities to employ the capital. PSEC is one of the safest high yielders you will find.
Sentiment: Strong Buy
PSEC increased its dividend becasue a few people were giving them a hard time about not paying a special dividend. PSEC had some undistributed earnings, and a few quarters ago they were talking about the possibility of a special dividend. Barry's position what that he felt it would be better to have a stable and slowly growing dividend. Obviously, PSEC gave in 1/2 way and bumped its dividend up by a penny -- which is easily covered for the next few years (hopefully, much longer).
As for PSEC's cost of capital: It's more than 6% when you average in the new shares. Nevertheless, at the end, it's how much NII per share they earn, as well as the NAV. PSEC has done a very good job these past two years and really turnned the company around.
I've been here 2 1/2 years now and I've done very well. Nevertheless, be aware that this is a BDC and that the chances of another offering within the next few months is very high. In addition, our economy is not out of the woods yet, so some volatility and/or a pullback can happen. My point: If you buy niow, be prepared to hold -- and possibly add more if things become over-sold. However, sitting on too much cash is even more dangerous. JMHO