Sunday, March 28, 2010

Basket of Income

The success of last weekend's Biotechnology Basket has triggered another idea, a Basket of Income Stocks that will pay a healthy dividend when the Trend Models are LONG, and yet will not share the risk of loss when the Trend Models say, "Exit, go to cash."   

The past few days I've been researching high-dividend paying stocks across diversified sectors, Bonds, Utilities, Oil & Gas, REIT's and assorted other sectors.  The concept is to put together a basket of these income generating companies that is as non-correlated as possible and where the individual stocks have historically trended well under the trend following algorithm either on the Daily and/or Weekly Models.

The results so far are very encouraging and I expect to be trading this basket myself, especially as a conservative, low-risk strategy for the benefit of conservative, low-risk accounts.  As with the Biotechnology Basket, I'll send it out to the email list first and eventually will post some if not all of the names here.

This is concept in beta phase right now, so all suggestions are welcome and encouraged.  Below are some ideas along with their Weekly Trend Models.

NLY - Yield 14.70%

NZT - Yield 11.20%

SUI - Yield 10.20%

These are three examples of what I am looking for and will not necessarily be part of the Basket of Income. To be considered, I am looking for stable dividends and price histories that trend well.  Once in that group, I will look to diversify across uncorrelated (or at least, less correlated) sectors.

The goal will be to be collect the healthy payouts along with capital gains when the model is LONG and to be in cash on the sidelines when the model is SHORT, avoiding high risk periods characterized by weak and falling prices.   The Trend Models are ideally suited for trading these kinds of stocks.



Anonymous said...

Brilliant Idea.BRAVO. Cant wait.
youre a star player.
this is what a star player does.

watching you create and evolve this web site and subscription has been stimulating.
..... keep up the good work.

t said...

I was just thinking of the same idea. are you open to any stock ideas for selection ??

Anonymous said...

Allan, much as I admire your work, I find every one of these to be frightening. NLY dealing with mortgage-backed securities, NZT has been listed by several others as a company that could be in big trouble, and SUI is essentially running trailer parks. Yikes !

A said...

Like I said in the post, these are simply three examples of high yield stocks with good trending characteristics, not necessary three stocks that will make the final cut.

Dave in Colorado said...

These are dividend stocks that have worked for me in the recent past. Potential ideas for you?
PWE - Penn West Energy trust (Canadian, so there foreign tax)
GLAD - Gladstone Capital
Disclosure: currently long in PWE

Dave in Colorado

Anonymous said...

omnia mihi licent sed non omnia expediunt omnia mihi licent sed ego sub nullius redigar potestate

We'll pass on the commercial real estate sucker bait. Why not throw in some California, Portugal, Italy and Greece bonds while you're at it.

This is where having a useful technical device can logically lead one into catastrophe. Among the fellas that ran LTCM were noble laureates with mathematical models.


Icarus is a character in Greek mythology useful to know.

Anonymous said...

Theres something about this idea that I like. why not be constructive in supporting it instead of cynical.
add something useful.

I like the idea of playing sectors that look strong. sectors,like precious metal miners, in relation to the USD,and gold price,etc

I like to see the biotech stocks running according to their own flow thats independent of the market indexes.

I like looking at stocks that somehow,for whatever reason,have ALREADY DROPPED DOWN TO THEIR JULY 2009 LOW. ...and have nowhere to go but up.

Look at XOM
would that be a good buy right now ?

how about CHK at 22

how about AUY at 10 or 9 ?

Are the oil stocks ready to buy or do they still have a little more down to go. I sense a little more down to go.

anyway, lets think of ideas.

What about these "cash Box" stocks that were among the few stocks that didnt collapse in 2008....
peoples united bank (PBCT)

Hilltop holding (HTH - PA)
from a newsletter advisor.

Anonymous said...

whay should i do with my mrna?

Digger said...

All time favorites for dividend payers are timber REITs PCL,RYN,PCH and WY will be converting to REIT soon. Timber ETFs might be worth looking at also although the dividend yields are not as high since there are non-dividend payers in the baskets. These are as much land plays as timber plays.

Anonymous said...


You may want to check out YLO.UN on the TSE. It's the Yellow Pages Income Trust currently paying $.80 in dividends, yielding 12.85%.

Next year it it will be paying $0.65 in dividend ( as it disclosed) and goes off the income trust format. It has strong management and a strong brand.

YLO/UN.TO looks like it could be breaking out on the weekly chart.



t said...

TODAY's Biotech note of note

MRNA blasted off great this morning ,took off to a 49 % spike. ended the day up 16%.

ISCO quietly rose
and ended the day up 16 %.

both star players.

emthree said...

Consider HTS for your Basket of Income. It's in the same industry as NLY.