Looking for that Pullback

I’m guilty of it. You’re guilty of it.

Buying a dividend paying stock when it’s already overbought and/or technically extended is not smart. Just because the company pays a good dividend, doesn’t mean anytime is the right time to buy. In order to maximize your return you have to look at it holistically as the sum of all its parts. Some will argue that the stock price doesn’t matter if there are no plans to sell. OK. I get that. However, that doesn’t make sense to me. Why not buy a strong dividend stock that ALSO grows value in the underlying equity? Someday, you may actually need or want to sell the stock. Why not have a winner in your pocket?

Right now, the equities market feels heavy and there appears to be more catalysts on the bear side than the bull side. If this plays out, we should see a great buying opportunity in companies/REITs that are positioned well headed into 2020. Two sectors that come to mind are data center REITs and Senior Living REITs. Both groups have had an epic year, but I just can’t add at these levels. My guess is that we’ll see some healthy pullbacks over the next few weeks and the opportunities to add positions will present themselves.