Relative Strength Alert For United-Guardian

The DividendRank formula at Dividend Channel ranks a coverage universe of thousands of dividend stocks, according to a proprietary formula designed to identify those stocks that combine two important characteristics — strong fundamentals and a valuation that looks inexpensive. United-Guardian, Inc. (UG) presently has an above average rank, in the top 50% of the coverage universe, which suggests it is among the top most "interesting" ideas that merit further research by investors.

But making United-Guardian, Inc. an even more interesting and timely stock to look at, is the fact that in trading on Monday, shares of UG entered into oversold territory, changing hands as low as $19.00 per share. We define oversold territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be oversold if the RSI reading falls below 30.

START SLIDESHOW:
Click here to find out what 9 other oversold dividend stocks you need to know about »

In the case of United-Guardian, Inc., the RSI reading has hit 29.4 — by comparison, the universe of dividend stocks covered by Dividend Channel currently has an average RSI of 57.9. A falling stock price — all else being equal — creates a better opportunity for dividend investors to capture a higher yield. Indeed, UG's recent annualized dividend of 0.96/share (currently paid in semi-annual installments) works out to an annual yield of 4.78% based upon the recent $20.09 share price.

A bullish investor could look at UG's 29.4 RSI reading today as a sign that the recent heavy selling is in the process of exhausting itself, and begin to look for entry point opportunities on the buy side. Among the fundamental datapoints dividend investors should investigate to decide if they are bullish on UG is its dividend history. In general, dividends are not always predictable; but, looking at the history chart below can help in judging whether the most recent dividend is likely to continue.

UG+Dividend+History+Chart

More from Stocks

Dow Seeks Direction as Bond Yields Inch Closer to 3% Threshold

Dow Seeks Direction as Bond Yields Inch Closer to 3% Threshold

Should You Invest In DowDuPont Now?

Should You Invest In DowDuPont Now?

Newell Settles With Starboard, Adds 3 Directors While Keeping Icahn Happy Too

Newell Settles With Starboard, Adds 3 Directors While Keeping Icahn Happy Too

Should You Fear Earnings From Mega-Cap Tech Names Like Google and Microsoft?

Should You Fear Earnings From Mega-Cap Tech Names Like Google and Microsoft?

Why the Stock Market Won't Crash When 10-Year Yields Smash Through 3%

Why the Stock Market Won't Crash When 10-Year Yields Smash Through 3%