dividends – Theta Bandits

Top Pick Tuesdays – Previous Pick Updates

Theta Bandits — Tue, 18 Jun 2024 13:00:00 +0000

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Welcome to this week’s Theta Bandits: Top Pick Tuesday. This week we are revisiting and updating ideas from earlier this year. While it has not been a long time since posting these ideas, this update serves as a reminder of the challenges we face in this ever-evolving market. While the market indexes are setting all time highs, let’s have a look and see where we stand. For each pick I have included the two screenshots: first from the original plan and the second is looking at the continuation from the Top Pick date indicated by a blue vertical line.

Pick #1 – Walmart Inc.

Walmart Inc. (WMT:NYSE)
Price at Preparation: $59.60 (Feb 26th, 2024)
Price at Update: $67.42 (Jun 17^th, 2024)
Gain/Loss: +11%

Update

Walmart Inc. (WMT:NYSE) was chosen based on the opportunity of a stock split. As pointed out previously the expectation was for the price to drop to the bottom of the channel. This only presented a very slight pull back before rocketing up and breaking out from the channel to new highs and above the previous 12-month Price Target (PT) indicated with green lines on the visuals. WMT stock price did not give the entry as part of the plan created here however, continues to do well.

Pick #2 – Exxon Mobil Corp.

Exxon Mobil Corp. (XOM:NYSE)
Price at Preparation: $108.38 (Mar 8^th, 2024)
Price at Update: $108.36 (Jun 17^th, 2024)
Gain/Loss: 0%

Update

While Exxon Mobil Corp. (XOM:NYSE) looks flat in the gain/loss to date, this is why we trade and keep our eyes on the levels. In the original plan here and the first visual aid below a break-out was detected, as well as a gap-to-fill. Looking at the update from the time of the pick, XOM continued with the break-out to fill the gap and reach a high of $123.75 USD (+14%) before retracing down. This high was above the target price planned and following the plan to mitigate risk by updating stop-losses and securing profit along the way leaves this trade in the green.

Pick #3 – Star Bulk Carriers Corp.

Star Bulk Carriers Corp. (SBLK:NASDAQ)
Price at Preparation: $24.17 (Mar 18^th, 2024)
Price at Update: $23.81 (Jun 17^th, 2024)
Gain/Loss: -1.5%

Update

Star Bulk Carriers Corp. (SBLK:NASDAQ) was identified as a “cup & handle” pattern which was completing close to the recommendation date. The second item being looked at on the original chart is the stock staying above the trend line. Since the recommendation date, SBLK had a brief pullback for the “handle” of the pattern before moving up thorough several resistance lines to a high of $27.47 USD (+13%) and almost reaching the avg 12-month PT resistance indicated. Since that high the stock has retraced down and has broken the trend line. The thesis of the stock has not been broken and the dividend of 7.66% remains intact, which was paid out during this period (typically following a dividend payout there is usually a little weakness expected in price). While this price action offered some decent exit and profit taking opportunities, this stock is still held as per the original plan discussed here.

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Disclaimer: This article is for informational and educational purposes only, not investment advice. We recommend researching and consulting with a financial advisor before making investment decisions. All actions based on this information are at your own risk.

Top Pick Tuesdays – Vale SA

Theta Bandits — Tue, 09 Apr 2024 12:29:00 +0000

Vale SA (VALE:NYSE)
Price at Preparation: $11.80 (Apr 5^th, 2024)

What they do

Vale SA (VALE:NYSE), formerly Companhia Vale do Rio Doce, is a Brazil-based metal and mining company which is primarily engaged in producing iron ore and nickel. The Company also produces iron ore pellets, copper, platinum group metals, gold, silver and cobalt. Vale is engaged in greenfield mineral exploration in five countries and operates logistics systems in Brazil and other regions of the world, including railroads, maritime terminals and ports, which are integrated with mining operations. In addition, Vale has distribution centers to support the delivery of iron ore worldwide with numerous subsidiaries, including Vale Logistica Uruguay SA, Vale Holdings BV, Vale Overseas Ltd. The Company’s operations abroad cover approximately 30 countries.

This week at Theta Bandits, we are bringing a stock to the forefront which is near it’s 52-week low with a bright 12-month average Price Target (PT) with a very nice dividend to help bolster returns to a portfolio. Today’s pick is Vale SA (VALE) – let’s dig in!

Opinion

Vale SA (VALE) is a versatile stock that can serve multiple purposes in a portfolio, from those wanting to hold and collect the dividend, which is a whopping 11.26% ($0.55 USD last paid on March 25^th, 2024) yield while putting this together. Or is cyclical and can be traded for the price appreciation. Over the past 52 weeks, this stock has had a range from $11.73 – $16.60 (USD). Focussing on the cyclicality, if we look at analyst PT for the next 12-months, the range estimated is from a low of $16.00 USD (+35%) to a high of $20.00 USD (+69%) with an average of $17.56 USD (+48%). Putting both factors together, we have the potential for a real winner on our hands. As always, the stock market is never a sure thing, so we need to adjust the strategy to fit our personal risk profile.

Plan

Using the visual aid graph below, there are some highlighted areas. We can look at those and identify a potential plan. From the 52-week high we had a drop, consolidation (which can be seen by the relatively sideways action on the chart) and then a breakout. Currently we have broken down to the 52-week low range of the price action. If the pattern is truly cyclical, there is a high probability that the stock will again consolidate before breaking out for a move higher. Since the dividend is high, this means that we can expect a pullback and volatility around dividend payouts.

For price appreciation plays the resistance zones of $14.50, $15.24 and $16.05 (USD) look like spots to target for profit taking which is a nice move from current levels. Even though the 12-month PTs are above that range – do we really need to risk getting all the way there? (The answer to this depends on your personal risk tolerance). The one nice thing about having a dividend of this size is that even during down waves, we get paid to wait, so if the dividends can counteract a price drop the stock can be held and give the trade the time it needs to work for us.

For more content consider our Theta Bandits Discord community, a hub for traders to ask questions, share ideas and strategies like the approach above for various other tickers daily. Traders in this community could potentially attack positions using a variety of methods discussed in previous Top Pick Tuesdays.

RISKS

In the plan above we are looking for dividends as well as price appreciation. Make sure to plan your trade with-in your risk tolerance and give it the time required to be successful, while setting and updating limits to mitigate risk and set exit points for your position as necessary.

Top Pick Tuesdays – January Picks Update

Theta Bandits — Wed, 06 Mar 2024 06:37:44 +0000

This week we are revisiting our Top Pick Tuesday’s from January 2024. While it has not been a long time since posting these ideas, this update serves as a reminder of the challenges we face in this ever-evolving market. While the market is setting all time highs, let’s have a look and see where we stand!

Pick #1 – Altria Group, Inc.

Altria Group, Inc. (MO:NYSE)
Price at Preparation: $41.34 (Jan 12^th, 2024)
Price at Update: $39.73 (Mar 4^th, 2024)
Gain/Loss: -4%

Update

Altria Group, Inc. (MO:NYSE) was chosen primarily to take advantage of the dividends. As we discussed in the original article outlining the plan, there was to be some volatility and identified a potential buy price at $40.93 USD, with potential for a better fill given the volatility of the triangle ranges. The price did drop slightly below giving a better fill and then hit the intersection as predicted however, post that intersection the price action has weakened slightly. As you can see since introducing this trade, the price is down approximately 4% with the deadline approaching for the ex-dividend date, which should be paying $0.98 USD per share held as of that date. Even though the trade is a little down, there is nothing that has been identified to break the thesis originally set out – so we continue according to the plan and collect the dividend payout.

Pick #2 – TransUnion

TransUnion (TRU:NYSE)
Price at Preparation: $67.69 (Jan 26^th, 2024)
Price at Update: $78.98 (Mar 4^th, 2024)
Gain/Loss: 17%

Update

TransUnion (TRU: NYSE) has accelerated well and is up a remarkable 17% in just over a month. The company did well on their Q4, 2023 earnings by beating their estimates and propelled the stock above the 12-month price target of $74.16 USD which was set by analysts. The stock is fast approaching their 52-week high of $82.75 USD. TransUnion does have a dividend payout soon, so there might be some volatility in the short term. Since this stock has moved up relatively fast, it will be prudent to secure at least some profit. Please refer to the original article for the thesis and plan that was set in motion.

For more content consider our Theta Bandits Discord community, a hub for traders to ask questions, share ideas and strategies for various tickers daily. Traders in this community could potentially attacked these same picks with different methods discussed in previous Top Pick Tuesdays.

Top Pick Tuesdays – Altria Group, Inc.

Theta Bandits — Tue, 16 Jan 2024 14:00:00 +0000

Altria Group, Inc. (MO:NYSE)
Price at Preparation: $41.34 (Jan 12th, 2024)

What they do

Altria Group, Inc. (MO:NYSE) operates as a holding company, which engages in the manufacture and sale of cigarettes in the United States. It operates through the following segments: Smokeable Products, Oral tobacco products and Wine. The Smokeable Products segment consists of cigarettes manufactured and sold by PM USA, machine-made large cigars and pipe tobacco manufactured and sold by Middleton. The Oral tobacco products segment is primarily moist smokeless tobacco products (MSTs) through brands like Copenhagen and Skoal as well as oral nicotine pouches sold by Helix. The Wine segment, through subsidiary Ste. Michelle Wine Estates Ltd, produces Washington State wines, primarily Chateau Ste. Michelle and 14 Hands. The group also owns wineries / distributes wines from several other wine regions. The company was founded in 1919 and is headquartered in Richmond, VA.

At Theta Bandits, where short-term trades usually take the spotlight, today’s focus shifts to a more long-term investment strategy centered around growing wealth through Dividends versus Price Action.

Opinion

Last week on January 9^th, 2024 Altria Group, Inc. (MO:NYSE) distributed its quarterly dividend of $0.98 / share, reflecting an approximate 9.48% yield. A common phenomenon post-dividend payout is a minor pullback in the stock price. Given the dividend payout percentage is relatively high, this means we are giving up some price action – as you can see the 12-month Price Target (PT) is only $46.91 which is a 13.47% gain from current levels. This high dividend percentage also leans the stock more toward a defensive category and like other stocks with high dividends have suffered from the high interest rates over the past year. Coupled with a consistently increasing dividend, any potential Federal Reserve rate cuts are anticipated to propel the stock price upward, offering both dividends and price appreciation in the coming years.

Plan

As always, please refer to the visual roadmap included below. As we are in pursuit of the dividend, we should be looking to identify weakness in the stock and using that well known expression “buy the dips”. Highlighted in white, both the price trend down and potential recovery are shown. In blue we show the expected volatility in the white triangle before a potential upward price movement. In orange support/resistance line suggests a potential buy price of $40.93, although with the volatility we might get a bit better fill.

Trading:

For trading the price action, the potential support / resistance zones for securing profit are marked at $42.31, $43.97, $45.17, $46.02 and $46.91 (PT). Any value above this point is gravy as the stock is fully values, but there definitely could be a potential move higher.

Dividends:

As the point of today’s article revolves around dividends – the purchased shares should be held until the next ex-dividend date to qualify for payment. As per the dividend payout schedule shown, expect at least 2 more payments at $0.98/share and then a potential increase in the dividend price.

For more content consider our Theta Bandits Discord community, a hub for traders to share ideas and strategies for various tickers daily – last week’s top trade:

RISKS

This trade is a long-term investment, while dividends contribute to earnings it’s crucial to review the information for dividend payouts and cross reference with price action volatility. Should the price depreciate and dividend payments fail to offset the gap, reallocating funds to the next opportunity would be the wisest course of action.