I decided to test a few high stock rank dividend stocks at the beginning of 2017 and 2018 to see if using a stop loss of stock rank falling below 75 (no longer green bullish section of the chart) was a good place to exit your trade. The results were mixed.
Firstly there was a share like Morgan Sindall (shown in graph). It has been in the green section of the chart (stock rank over 75) since 3rd August 2016. If I bought the share at the beginning of 2017 it has risen nearly 300% from 745p to 2935p and at the same time it has paid dividends amounting to a further 75% gain. Probably just picking a share like this is justification for any one that loses.
However then there are shares like Taylor Wimpey. At the beginning of 2018 its stock rank was 99. However by 3rd April 2020 despite its stock rank being still over 75, its share price had fallen 47% to 99p. When its stock rank finally fell below 75, its share price still had fallen 37% to 121.8p. Though there were 17% dividends in between its still a 20% loss in total.
•Though these results and others were distorted by Covid. But of the 36 high stock rank (mainly FTSE 350) shares paying good dividends I selected at the beginning of 2017 or 2018, 12 of them suffered losses greater than 15%, and 8 of these 12 were down over 30%, whilst still possessing a stock rank over 75 for the whole period from entry to the price low.
•Results may have been improved if you used a 15% hard stop instead, though this could have meant losing out on Plus 500. I think Plus 500 has always had a stock ranking in the green column (above 75), but since the start of 2018 it fell to 480p, a 39% decline, yet now Plus 500 has risen 222% since 2018, whilst paying dividends amounting to a further 135%. Though of course with a 15% hard stop loss, you still could have got back into Plus 500, though you would need a further entry reason (ie buy over stock rank 90) as its always been over 75 in its stock rank.
•Despite the losses, the average gain from the 36 stocks at the beginning of 2017 or…
