Here’s your trade on a massive yielding stock. Check out Western Asset Mortgage Capital ($WMC) (March 26, 2020)
WMC TNX--X WMC
Western Asset Mortgage ( NYSE: WMC ). Here’s the deal, this is the yield on this thing because it is absolutely taking it in the shorts, by the shorts. You can see the chart here, 42 percent.
Now, I don’t know whether the company is going to cut their dividend, you would think so. But over the last couple of days at one point the stock is up 76 percent and I would have to think that some of that is due to this huge massive yield. Like people are wanting high yields, when you have got the 10-year down as low as it is.
Think about this as .8 of one percent, not even one percent. So then you look at this type of thing and it is just a monster yield. But what is even better is the chart itself. The stock is up 25 percent just today but you can see after hours it is trading up around $4.00, close to it, so that is up another 8.5 percent.
So what’s the trade? I am not talking about the dividend. I know we’ve got on our website we’ve got yield hog people, fans that own these high dividend stocks and do really, really well all throughout the swings in the market. Though look, anyone would tell you, this is one hell of a swing to the downside.
But now we are in the upside direction and so just for a trade I would suggest this: You want to see the stock, tomorrow, stay above the close here of 42.47, you really need to see it stay above that level.
I think you can buy this stock, hopefully, right around where it is trading now. And 4.50 would be your first level of resistance that was today’s high. But if it clears that I think you can see $5.00 on this. And that might not sound like much but you can do the calculation on a percentage basis; buying a stock at $4.00, selling it at $5.00, I don’t know, in my view that works pretty well; 4.5 million shares traded today, plenty of liquidity, there’s your quick trade on this.
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