For someone who claimed he wouldn't recommend people follow his stock market advice, I’m certainly speaking a lot about it of late. I like the system I’ve worked out from the couple years of study and trial and error and I like patting myself on the back.
I acted on the tactic I spelled out a couple weeks ago regarding selling a portion of my A. Schulman (SHLM) stake to purchase more shares of Paychex (PAYX). I sold more shares of the former and purchased less than the latter so that I could get the proper position of a new dividend stock. I’ve abandoned my plans to repurchase shares of Boston Beer (SAM) as I am more focused on collecting dividends. Plus, SAM suffers from a roller coaster of price fluctuations that is hard to stomach. I was able to find a small cap stock that filled in my First Month of Quarter dividend group (M1Q). I now have four stocks for each month of the quarter.
Hot Topic, Inc. (HOTT) is a specialty retailer for teenager clothing. I asked my daughter about the store and she turned up her nose. Hot Topic seems to have a lot of clothes for the Emo/Skater demographic. Be that as it may, the dividend is $.07 per share and the minimum shares I needed to cover the 52-week High price were 125. The ex-dividend date is 10/14/11 and the dividend payout will be on 10/31/11. I sold 70 shares of SHLM, purchased 20 of PAYX, and used the remainder for HOTT. My moves improved my estimated yearly dividends by almost $20.
I still have enough to purchase a small amount of shares to improve my position in either Waste Management (WM) or Hershey (HSY) and to cover the 52-week High price. The dividends are similar, but I can get twice as many shares of WM, so I will go that route, and increase my yearly dividends by more than $12 in the process.
I had noticed my other M1Q stocks – B&G Foods (BGS), Windstream (WIN), Xcel Energy (XEL) – were trending downward as they approached their dividend pay dates. As I mentioned before, my new system allows me to see declines in prices in a different light as they allow for marginal increases in reinvested shares. The other benefit of lower stock prices is getting reinvested shares at a lower price than the cost per share. The cost per share can be reduced, at times just by a couple pennies, but when the stock rebounds, you can get a little more profit out it. Knowing this, I can ride out the market fluctuations without overreacting.
To paraphrase my mom and my accountant – I’m gonna retire rich, bitch!
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