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Four Dividend Stocks Shaping Constructive Patterns

By: Investor's Business Daily
Posted: 4/2/2014 6:11:00 PM
Referenced Stocks: TROW;BLK;STT;BAM

Some dividend stocks in the Finance-Investment Management group either recently shaped or appear to be shaping first-stage bases.

A rising stock will interrupt its advance to consolidate, ideally shaping a base. Breakouts from the first or second consolidation work better than those from later consolidations.

So the first-stage base is a good thing. Also, any kind of a base is relatively rare right now. As The Big Picture pointed out in Wednesday's IBD, "today's buy opportunities are in pullbacks to the 10-week or 50-day moving averages."

The recent minor pullback in the market was too brief to give most stocks a chance to form new bases. Yet many of the investment-management stocks are far along the base-building process.

The money-manager stocks started declining in early to mid-January, bottomed in early February and then either moved sideways or worked on the right side of a base. The action leaves some in position for a breakout.

Some may object that breakouts are irrelevant to the income investor, who buys with the idea of holding. However, everybody can see the value of gaining an early cushion via a successful breakout. Only gains make a stock easy to hold.

T. Rowe Price Group ( TROW ) is one of the investment-management stocks now near a new high. The 10% deep, first-stage base could offer an entry at 84.51. The annualized dividend yield is 2.1%.

BlackRock ( BLK ) is approaching a 326.10 buy point in a first-stage base. The cup is about 13% deep. The yield is 2.4%.

State Street ( STT ) is about 9% off its high in a first-stage consolidation. It has more right-side work to do. The yield is 1.5%.

Brookfield Asset Management ( BAM ) recently cleared a 40.92 buy point for a second time. The first stab in late February led to a 5% correction. The most recent stab came in low volume. The stock remains in the 5% buy zone. The yield is 1.9%.