Published Mon, 25 Mar 2019 08:21:42 -0400 on Seeking Alpha
Buying a dividend stock at the right time can be much more rewarding than doing the same for a "normal" stock in that you not only gain alpha via excess returns but also by "locking in" a superior yield. While I encourage investors to choose a stock via a handful of statistically relevant factors, many investors ignore the market-timing aspect due to the commonly held belief that you cannot time the market. Yet many stocks and ETFs show strong seasonal patterns that allow an investor to - on average - buy at relative lows.
The Dividend Mindset Applied to Seasonality
Just as dividend investors implicitly believe that past results predict future results (i.e., many dividend investors look to yearly dividend hikes - such as those seen in "Dividend Aristocrats" - as evidence that a particular stock will continue raising dividends), I believe that stocks performing well a certain month within the year for many years will continue to do so. We do not always understand the reason behind such seasonality, but a couple possibilities include strong quarterly earnings coinciding with a certain month or business/macro seasonality.
Every X month, I run backtests on stocks and ETFs to create my "Monthly 100" and "Monthly 0" shortlists. The former refers to stocks that have risen every X month for the current volatility regime, while the latter refers to those that have fallen (and thus create a shortlist of short opportunities). As we are focusing on dividends in this article and do not... Read more
|Stock name||Last trade||P/E||Earnings/Share||Dividend/Share||Dividend yield|
|BLACKROCK CORPORATE HIGH YIELD FUND VI||10.50||0.0||0.00||0.00||8.24|
|POWERSHARES CEF INCOME COMPOSITE||22.37||0.0||0.00||0.00||6.97|
|SPDR BARCLAYS CAPITAL HIGH YIELD BOND ETF||107.88||0.0||0.00||6.08||5.64|
|ISHARES IBOXX $ HIGH YIELD CORPORATE BOND FUND||86.35||0.0||0.00||4.59||5.32|
|SPDR DOW JONES INTERNATIONAL REAL ESTATE ETF||39.06||0.0||0.00||1.84||4.68|
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