Although U.S. markets ended the past week broadly higher, after a long and remarkably steady rise since December, markets are overdue for a brief correction.
So, although all of your positions but one are trading above their 50-day moving average and are therefore technically “BUYs,” you may want to take a more defensive posture in the coming week.
In terms of actions to take this week in your Dividend Pro portfolio:
First, sell your remaining March $22.50 calls in Northern Tier Energy Trust LP (NTI) for a solid 31.8% gain. You already sold half of your options on Dec. 20 for an 59% gain. But I want to lock in your remaining option gains here before any correction in the stock.
Second, I recommend that you sell your position in CVR Partners, LP (UAN) for a 7.6% gain. The company declared a payout of $0.192 per unit for its Q4 last Thursday. On an annualized basis, the distribution is worth $0.768, putting the partnership’s yield at approximately 2.6%. That’s a mere fraction of what it was in previous quarters and far below our rule of thumb minimum here at Dividend Pro. Remember, when we sell a stock, we also sell the corresponding options as soon as possible. That means you should also sell your February $30 calls in CVR Partners, LP (UAN).
Third, make sure you tighten your stops on some of your biggest Dividend Pro winners this week to ensure you lock in your profits. You can see these highlighted in the Portfolio Update section below.
I also wanted to highlight a couple more things in your Dividend Pro portfolio.
First, all but one of your Dividend Pro positions are profitable, with a whopping seven positions showing double-digit percentage gains. Two Harbors Investment Corp. (TWO) leads the pack with over a 33% gain, including dividend payouts. Three of your Dividend Pro positions — Global X SuperDividend ETF (SDIV), Two Harbors Investment Corp. (TWO) and Rentech Nitrogen Partners, L.P. (RNF) — hit new, 52-week or all-time highs this week. RNF, in particular, has had a spectacular start to the year and is up 27.83% since Jan. 1.
Second, you’ll note that you have a lot of dividend payouts this week. Annaly Capital Management (NLY), Peritus High Yield ETF (HYLD), Fifth Street Finance Corp. (FSC) and Apollo Residential Mortgage Inc. (AMTG) all paid dividends this week or are due to pay them today.
It is always nice to hear the cash register ring…
I’ll be back next week with a new Dividend Pro recommendation.
And, as a courtesy, I want to bring your attention to my latest special report: The Top 12 Stocks You Should Buy Right Now. You can get it FREE from my website.
Global X SuperDividend ETF (SDIV) rose another 1.04% last week, hitting yet another 52-week high. SDIV is a global play on dividends, with assets concentrated in the United States, Australia, Britain and Canada. The index uses an equal-weight approach to the 100 represented companies. SDIV remains a BUY.
Two Harbors Investment Corp. (TWO) rose 0.81% this past week, also hitting a new 52-week high. Expected to pay out a good chunk of its 18-million shares of SilverBay (SBY) to TWO shareholders as a special dividend around March, this bet on the U.S. housing recovery remains a BUY. Raise your stop to $11.75.
PIMCO Municipal Income Fund II (PML) tumbled 2.99% for no discernible reason. PML, a closed-end management investment company which seeks to provide current income, is exempt from federal income tax. Slipping below its 50-day moving average (MA), PML is now a HOLD.
Apollo Investment (AINV) fell 1.34%, after hitting a new 52-week high the previous week. The company will report its third quarter results for the period which ended December 31, 2012, on Wednesday, February 6, 2013. Trading above its 50-day MA, AINV is a BUY. Raise your stop to $8.20.
Omega Healthcare Investors Inc. (OHI) corrected 0.89%, as the stock went ex-dividend. Its quarterly dividend of $0.45 is payable on February 15, 2013, to common stockholders of record as of the close of business on January 31, 2013. OHI is a BUY.
PowerShares Preferred (PGX) dropped 0.47%. Preferred stock is a surprisingly good diversifier with a low correlation to other income-generating asset classes like real estate investment trusts (REITs), master limited partnerships (MLPs), corporate bonds, Treasury inflation-protected securities (TIPS) and popular income exchange-traded funds (ETFs). A monthly income payer with a 6.47% yield, PGX is a BUY.
Fifth Street Finance Corp. (FSC) rose 0.37%. Look for a monthly dividend of $0.0958 due today, Jan. 31. FSC plans to report earnings for the quarter, which ended December 31, 2012, after the financial markets close on Wednesday, February 6, 2013. FSC remains a BUY.
Rentech Nitrogen Partners, L.P. (RNF) jumped yet another 3.97%, hitting yet another new all-time high. Analysts on Wall Street have Rentech pegged for an average 12% earnings growth rate over the next five years. Others think it could go much higher. Up 27.83% just this year, RNF remains a BUY. Raise your stop to $43.50.
Annaly Capital Management (NLY) rose another 0.47%. You received a cash dividend of 45 cents per common share on Jan. 29, if you were a shareholder of record on Dec. 28. With interest rate spreads widening once again, NLY is a BUY.
Peritus High Yield ETF (HYLD) fell 0.37%. Shareholders of record on January 29, 2013, will receive a cash distribution of 0.2811 paid on January 31, 2013. HYLD remains a BUY.
Northern Tier Energy Trust LP (NTI) rebounded 3.12% as rival Valero Energy (VLO) blew past the $1.18 consensus estimate for Q4 earnings. NTI remains a BUY. Raise your stop to $22.50.
Apollo Residential Mortgage Inc. (AMTG) rose 0.58%. Your $0.70 per share dividend is payable January 31, 2013, as long as you held the stock on December 31, 2012. AMTG is a BUY.
SPDR S&P Emerging Markets Dividend ETF (EDIV) tumbled 1.41% on a general pull back in emerging markets. Yielding 5.43%, this bullish bet on emerging markets is a BUY.
UBS E-TRACS 2x Wells Fargo Bus Dv Cm ETN (BDCL) fell 0.66% last week. With an eye-popping yield of 12.87%, BDCL remains a BUY. Raise your stop to $24.50.
Market Vectors International High Yield Bond ETF (IHY) continued its slow and steady rise, up 0.04%. This high-yield play remains a BUY.
Banco Santander, S.A. (SAN) rose 1.17% in its first week in your portfolio. Santander was named as a Top 10 dividend-paying financial stock in the most recent ”DividendRank” report. At a price of $8.81, Santander trades at a price-to-book ratio of 1.2 and an annual dividend yield of 8.97%. By comparison, the average stock in Dividend Channel’s coverage universe yields 3.9% and trades at a price-to-book ratio of 2.1. Santander remains a BUY.