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Going For Income

06/21/18 04:29:55 PM
by Koos van der Merwe

With the recent volatility in the stock market, where should one put one's money ?

Security:   COST, JPM
Position:   Accumulate

The recent uncertainty in the stock market, where stocks rise, then fall then rise again and once again fall, causes one to wonder where to put one's money. On Friday, June 1, the May jobs report presented by the US Labor Department came out just as economists predicted it would. With 223,000 "new" jobs last month, the US labor market remains strong. The Dow Jones Industrial Average climbed to recoup the losses of Thursday, May 31. With the Trade War catching the headline, and with the Canada, Mexico and European Union retaliating, one asks, "where is the best place to put money?" The answer? Dividend stocks.

Figure 1. Monthly chart for Costco.
Graphic provided by: AdvancedGET.
The chart in Figure 1 is a monthly chart of Costco, showing how the share price has climbed steadily from a low of $39.20 in March 2009 to a high of 201.76 by May 31, 2018. This in spite of the RSI index at overbought levels suggesting a sell. The dividend paid by Costco has experienced a strong and consistent growth. The company also pays out special dividends, but the payout timing is not that easy to predict.

Figure 2. Monthly chart for JP Morgan.
Graphic provided by: AdvancedGET.
The chart in Figure 2 is a monthly chart of JP Morgan, showing how the share price has climbed from a low of $15.36 in March 2009 to a high of $119.50 by January 2018. The RSI Index is at overbought levels and has given a sell signal. JP Morgan remains a comfortable investment for investors looking for a reliable income. Admittedly the % income is low, but the dividend received is consistent.

Then, of course, there are Canadian stocks that pay a comfortable dividend, with a return greater than 5%. Here I mention A&W Revenue Royalties Inc Fund, Canoe EIT Income Fund, Crus Energy Trust, Dream Global REIT just to mention a few. When the market falls, one should either go to cash, or to stocks that pay a healthy consistent dividend.

Koos van der Merwe

Has been a technical analyst since 1969, and has worked as a futures and options trader with First Financial Futures in Johannesburg, South Africa.

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