Today is a perfect example of why I "scale" in or out of positions...
I had built quite a large position in the Junk Bond ETF (JNK)... some 60,000 shares. Remember that this, and a couple other names, are used to "park" cash until I want it for investing. This ETF pays a monthly cash flow of almost 13 grand on this amount of shares (.21 per share per month!)... so you understand why I don't just let this kind of cash sit in a Money Market account etc.
A couple weeks ago I decided I should cut this down and get busy buying some shares - so sold HALF the position. I never get "antsy" to just rush money around... so no need to sell ALL and then try to find suitable homes for it. These "employees" were very content and working hard in their current jobs there at JNK!!
So the reason for todays post.... JNK paid me a full dividend - because I always check to see what the EX dividend date is
before I sell anything! No point in missing the EX date dividend (that would be just stupid)... and the full position had a paper gain of about 24K at the time of the sale. I sold half. With todays paper gain - the half that's left shows a 20K paper gain. BINGO! Gotta love that!
Remember -- we want TOTAL RETURN... that's the dividend stream AND the capital growth combined!
Obviously I'm well aware that most of you don't have these kinds of numbers to play with... However, the LESSON here is what needs to be focused on - it does translate regardless of the amounts involved.
So REMEMBER to check the EX dividend date before a sale! And don't be afraid to take a profit! And don't sell everything all at once or buy everything all at once if you have "enough" position to be able to scale in and out (Unless the position has blown up and is heading down in a hurry - but that's a different discussion).