It is near the end of an ugly week, but the dividend story for The Dividend Hunter portfolio stocks remains intact. If you have cash available or are a recent subscriber, the current lower prices are an opportunity to average down or get in at lower values/higher yields than when the stocks were first recommended. I personally added to my New Residential Investment (NYSE: NRZ) position this week.
Today you will notice that the Legacy Reserves LP (Nasdaq: LGCY), featured in the October 2014 issue, unit price dropped by about 4%. Legacy just completed a secondary issue of new LP units into the market. Both REITs and MLPs regularly raise capital for investment with secondary equity offerings. These offerings always come to market with a offering price that is several percent below the going market value. The lower price is to ensure all of the new units are absorbed quickly. Within several weeks of a secondary issue, the price will recover back to its previous levels. Share or unit offers into the market like today’s with LGCY are another good time to invest in these companies at a lower price.
September and October traditionally are volatile (meaning lower prices, uncomfortable kinds of volatile) and the price action these days makes it tough to open our brokerage accounts and look at the results. These days too shall pass and in the second half of October, dividend and earnings announcements will start to bring some reason back to the values of the higher-yield, stable dividend stocks.
Have a great weekend!