Diary of a Dividend Diva: Make Hay While the Sun Shines

 | May 11, 2012 | 7:19 AM EDT
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I often tell you that a key to success in the dividend capture strategy is to "make hay while the sun shines." When the market is rising, and getting out of your trades is relatively easy, you should be doing as many trades as possible, booking as many dividends as you can. When the market rolls over, and many trades are likely to end up as losses, cutting-back activity is advised. In fact, there is nothing wrong with doing nothing in a terrible market! However, once stocks have declined for a while, initiating new trades can take advantage of lower prices, creating positive results quickly and painlessly.

We had such an opportunity with the trades I posted Wednesday. I gave you a list of upcoming dividends at which to look, with some highlights over the ones I thought might be interesting. Among those names were UPS (UPS), KLA-Tencor (KLAC), Exxon Mobil (XOM), Eli Lilly (LLY), Manulife Financial (MFC), DuPont (DD), Xilinx (XLNX), Marathon Oil (MRO), Avon (AVP) and Microchip Technology (MCHP).  

The Tuesday-to-Wednesday correction, which bottomed out Wednesday morning, turned out to be a wonderful buying opportunity -- sometimes better lucky than smart, as they say. Nearly all of those names are trading above where you would have bought them, and you can work out of them with a profit while capturing the income. I am already out of KLA-Tencor in one day, and should be out of Dupont and Microchip Tech very soon (they are not ex-dividend yet). Avon is another lucky one, as the group attempting to acquire them is pushing for a slightly higher bid. "Better lucky . . ."

We are buying a bit higher now, but I initiated trades in yet more semiconductor names. I started Linear Tech (LLTC) and Maxim Integrated (MXIM). I also started some Chevron (CVX). All three will pay dividends of slightly less than 1% in the next week.

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