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A 16% Stock Profit in 6 Months!

March 10th, 2014 at 04:46 pm

I just sold 1378 shares of oil stock QRE for a 6-month 11.4% gain. I sold for $25,313 and my cost was $22,751, so I made $2562. Plus I collected $1120 in dividends during the 6 months I held the stock. That gives me a 16.2% total 6-month profit amounting to $3682. This is a perfect example of how my high-yield high-risk investing strategy works when it works. Here's what I do.

I only buy stocks with dividend yields above 8%. To contain my risk, I limit any one stock to 5% or less of my portfolio value. I make sure I understand the company's business model going forward. And I only buy into companies passing these financial health tests: (1) current assets exceed current liabilities, (2) total assets (minus goodwill) exceed long term debt, (3) operating income exceeds interest expense, and (4) operating cash flow exceeds dividends being paid.

I set my buy price based on the price support level showing on the stock's 6-month price chart. For example: if a stock's price support is at $18.25 and its annual dividend is $1.65, I add those 2 numbers together and set a limit buy price of $19.90. And under no circumstances will I buy above that $19.90 limit. That way, if the stock's price drops after I've bought I've got an excellent chance of having the dividends make up for the drop.

Then I sit back and collect my dividends -- unless and until the stock's price rises 10% above my buy price. At that point, I can collect a year's dividends in advance by selling. So I do, which is what I just did with that QRE stock. And having collected that $2562 "dividend gain" in advance has given me a whole year to find another stock to invest the $25,313 cash generated by the sale. Which is what I am doing now.

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For a deeper look at my investing strategy, see my post My High Yield High Risk Investing Strategy at http://retired-to-win.savingadvice.com/2013/12/20/my-high-yi...

(Disclaimer: This strategy works for me, but there's no guarantee that it will work for anyone else. I am not a financial or investment advisor.)

2 Responses to “A 16% Stock Profit in 6 Months!”

  1. snafu Says:

    I suggest watching Oil & Gas ETF with a view of possibly buying in late Dec. and sell late Apr. or early May. It's their season.

  2. Retired To Win Says:

    Could very well be. I just sold another oil stock (MEMP) for a 10% profit after holding it just 2 weeks.

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