Shorting the high Div payers

Discussion in 'Stocks' started by diablo11, Jan 3, 2012.

  1. In the spirit of fading what CNBC is always pumping I have decided that the risk/reward is in my favor to put on a small short of one of the big div payers, I wont get into my reasons but I chose Dominion (D). I think that the yield seeking crowd is an extremely crowded trade and in the spirit of the market they will be punished for piling into what they believe is a safe play. I cant take hearing another guy coming on to the tube telling me his call for 2012 is "safe" dividend paying stocks. I know shorting something at an all time high is not the smartest idea but I feel we have hit a good risk/reward balance. I feel theres way less downside risk on the short side. If I can avoid the ex-div date I also wont need to pay the dividend for the shares I borrowed. Interested if anyone else agrees/disagrees. Thanks.
  2. What is really needed to evaluate your position is amount invested and anticipated return.

    I do agree with you that the dividend play was touted ad nauseam. But whatever, high dividend stocks have done ok.

    My concern with your strategy though is that high dividend stocks tend to be slow movers.

    For just the hassle of watching a position I would want to be in something with more pop potential.

    As an aside - The Fed has made it clear it is keeping interest rates low for at least the next year.
  3. So far so good.