I entered a new position this morning and I thought I would discuss the reasoning.
Trade: Long on POWER FINANCIAL CORP 4.95% NON CUM PFD K (PWF.PR.K:TSX).
Goal: Dividend income.
(Image from http://www.stockhouse.ca)
Analysis:
- Support at $23.10
- Resistance at $24.20
- Down-side potential of 0.09 and upside of $1.00, however at redemption price this would be a an upside potential of $2.81.
- Immediate descending triangle
- Negative moving average and MACD.
- Thinly traded makes it somewhat volatile.
- Listed yield of 4.95% and redemption of $26.00. Currently trading at $23.19 and yielding 5.3%
Reasoning:
- Even though this is showing a couple negative technical indicators, if it remains above support then it should be okay with a short-term upside of $1.00 or 4.3% gain.
- My goal for this stock is the yield so as long at it does not break through support then I should be able to earn at least the 5.3%,
- Trading at a discount to the posted yield and redemption price so there is a possibility for a capital gain.
If you have any criticisms please let me know.
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