The power of dividends

Today I sold my stake in Full Circle Capital (FULL) because I didn’t like the outlook of this company and I think, there is a potential for a dividend cut. In short, the FULL portfolio seems not supporting today’s dividend rate and the company pays more in dividends than it brings in.

So I sold the stock @7.51 a share and made $8.96 (commission excluded). That sounds like a bad trade, right? If I include commissions I actually lost money. If I include inflation for almost a year period of holding this stock, I lost even more money, right?

Well, the whole story is in dividends and that’s why I really like investing into dividend stocks. Over the period of holding this stock I received $98.56 in dividends. If I use those dividends to offset my cost basis of the stock, my profit then was $107.52 or 11.20%.

I think, that wasn’t a bad trade, wasn’t it?

So what to buy in lieu of FULL?

I have two potential candidates to buy. One is NGLS I wrote about in my previous post and the second is PSEC which has a lot better quality portfolio than FULL and thus safer dividend payout. Right now I am only waiting for a good entry price. Both stocks were in upward move, so I think it will be worth to wait for the first pull back to buy.

NGLS is right below 200 day MA, so before it breaks through, it will most likely retreat a bit and then I will buy.

PSEC already had that pullback about a week ago and then broke through the 200 day MA, but that break thru looks somewhat weak to me and the stock may pull back again. The price action looks like a consolidation to me, so I will wait for some move, if the stock moves up I will buy, if it moves down, I will wait for the price to drop further down and buy then.

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  1. Dan, thanks for stopping by. I agree. 11% gain isn’t that bad for less than a year. I held this stock for about 9 months. So I am happy with it. Wanted to hold longer, but I wasn’t comfortable with the stock anymore.

  2. It’s always interesting to see how what appears to be a bad trade ends up looking after you take the dividends recieved into account. I’d say an 11% gain over the year is pretty good and I’d be happy with it.