The Money Tree

Safely Generating Income in Retirement

NOK – Position Closed

Posted by mounddweller on May 1, 2011

Fellow Traders,

On Friday I closed out my position in NOK.  You’ll recall I initiated this position back on March 11th.  My objective in this trade was to capture Nokia’s dividend which, like a lot of foreign companies, is only paid once a year.  The ex-date for their annual dividend is May 4th.  I know what you’re thinking, Troy you sold too early, you’re not going to get the dividend.  Correct, I’m not.  Instead I applied the old adage, “a bird in hand is worth two in the bush!”  I decided to take advantage of the run-up in price and take the capital gain while I had it as opposed to collecting the dividend on May 4th and then perhaps having the stock fall back substantially.

Here are the transactions for this trade:

This turned out to be a wonderful trade.  In just 49 days I was able to generate a ROIC of 12.53%.  I consider that to be quite satisfactory.  This trade worked out so well that I am going to look for other foreign companies who pay substantial dividends once per year.  The strategy is simply to buy the stock a few weeks prior to the ex-date and ride the run-up as other traders drive up the price to get into the stock and capture the dividend.  If the stock rises substantially before the ex-date, take the money and run.  If it doesn’t, hold on to the stock, collect the dividend and then sell covered calls against it until the price recovers from the drop after going ex-dividend.

Regards,

Troy

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2 Responses to “NOK – Position Closed”

  1. Irene S. said

    Sounds like a great trade. It will be useful to find the other foreign once a year dividend stocks. http://seekingalpha.com/article/265753-9-one-shot-dividend-plays here is nine.
    Irene

    • mounddweller said

      Irene,

      Good to hear from you! It’s been awhile. I haven’t had a chance to dig up any other good dividend paying foreign stocks yet.

      Regards,
      Troy

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