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OCIR: Big Dividend, Big Profit

June 6th, 2014 at 04:16 am

Between February 5th and February 21st, I bought 1380 shares of OCI Resources (OCIR) for $29,288. On May 28th, about 3 months later, I sold those shares for $32,766. That sale gave me a $3478 realized gain. Just one month before that sale, OCIR had paid me $690 in quarterly dividends. All told, holding OCIR for a little over 3 months netted me $4168 which worked out to a 14.2% profit on my original investment. This was another "textbook case" of my dividend-based investment approach* in action. Here is how that worked this time.

I discovered OCIR during my weekly stock search. Its 9.4% dividend yield caught my interest. Its financials passed my tests.* And its business model, centered on long-term sales contracts, gave OCIR's dividends the extra stability I like to see.** So it was just a question then of when to buy shares of this utterly boring soda ash mining and production company.

OCIR was good to buy right then. That was because the stock was selling around $21 a share with solid price support at $20.00. So, if I bought around $21, the stock's annual $2 dividend would give me downside protection down to $19, which would be well below OCIR's $20 price-support level. This made OCIR a "safe buy"* right then and there.

I bought at an average $21.22 and sat back to collect dividends. Because that is what I always do. I buy stocks for the dividends.*** I never buy a stock on the expectation that its price will rise. (Well, almost never.****) But often, the price does rise. That is what happened with OCIR, due to some happy talk about the company here and there in the investing blogosphere.

And within 3 months, OCIR reached my sell point. That sell point was a 10% realized gain, which in my view is the same as collecting an entire year's worth of dividends in advance.***** So I pulled the trigger and sold OCIR once its price had risen past that point -- which is another thing I always do. And that (1) put a year's expected income in my pocket now from the $29K I had invested, and (2) gave me a year's time to find the next company in which to invest that now cashed-out $29,000.***** Like I said at the beginning: a textbook case.

The takeaway: Have a plan for your investing. Have the discipline to stick to it if it is working, and the flexibility to change it if it is not working. Know how much money you want to make and take it when you have made it. Do not be greedy. And know how low a stock's price can fall before you need to start worrying. Do not be a Pollyanna. But do not be a scaredypants either.

# # #


* My High Yield, High Risk Investing:
http://retired-to-win.savingadvice.com/2013/12/20/my-high-yi...

** Stacking The Deck For Dividends:
http://retired-to-win.savingadvice.com/2014/04/14/stacking-t...

*** Why I Only Buy Dividend Stocks:
http://retired-to-win.savingadvice.com/2014/01/01/why-i-only...

**** Stock Panic Nets Me 13% Overnight:
http://retired-to-win.savingadvice.com/2014/05/15/stock-pani...

***** What Makes Me Sell a Stock?:
http://retired-to-win.savingadvice.com/2014/01/14/what-makes...

1 Responses to “OCIR: Big Dividend, Big Profit”

  1. Rachael777 Says:

    Just giving thanks for all these thoughts and advice. Thanks. Smile

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