Tuesday, July 25, 2017


HWBK joins UVE as my second "free" stock.  What I mean by free stock is, I have none of my out of pocket cash invested.  Like UVE, I purchased shares of HWBK back when they were cheap and held on until I saw over a 63% gain.  Then I sold enough shares to take out all my original cash investment and kept the remaining shares.  The way I see it, from now on, whatever these stocks earn in dividends or capital gains is pure profit!  So they're definitely long term holdings.  Why would I sell something producing cash dividends when I have no money invested in them?

I used the cash I pulled from HWBK to add MRK to my IRA account.  Aside from gaining 4 additional dividend payments per year, the dividend yield from MRK is double what I was earning from HWBK.  My investment in MRK could be long or short term, depending on price performance.  Should I see a nice price increase anytime soon, I'll sell and take the cash.  However, if the price should lag, I see nothing wrong with holding on to a good stock and drawing the dividends.

That's the basis of my trading strategy I've recently developed for my non-taxable accounts.  I buy a position in one of the big blue chip dividend stocks and wait for a big enough price increase to sell for a small profit.  I keep the cash profit, less commissions and reinvest my original cash in another big blue chip dividend payer.  If I get stuck holding the stock, it's O.K. because I still have a good stock paying cash dividends.  Some of the stocks I've sold so far, were not bad stocks, but if I can collect the same amount of money as I'd get from 10 or 12 years worth of dividends by selling now, I'm going to sell.  Along the way, I figure I'll come across opportunities like UVE and HWBK where I'll be able to pull out all my cash and keep the profit as shares of the original investment, creating more "free" stocks for my portfolio.

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