Pullback Puts Dividend Stocks on Sale

Anyone who has been investing for any length of time knows that buying stocks that pay reliable dividends can be a key component in a long-term investing strategy when those dividends are reinvested. For short term traders, the benefits of dividend-paying stocks - and ETFs that consist of dividend-paying stocks - are more muted. Holding a position for three, five or eight days often means that the trader will not be in possession of the stock or fund when dividend payout time comes around.

This, by the way, is important whether you are buying the dividend paying stock - and expecting a dividend payout - or selling the dividend paying stock short - and providing a dividend payout. But just because dividend paying equities provide their greatest advantage to longer term holders doesn't mean that they can't play a role in a short-term trading strategy, especially when these funds are among the few trading in oversold territory above the 200-day moving average.

Source: NASDAQ

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