Are stocks that pay monthly dividends a good choice for income-seeking investors?
From the standpoint of technical analysis, I would be hesitant or uncomfortable in going long any of these five names. All of these stocks look vulnerable to a setback, correction or more.
Chatham Lodging Trust
In this daily chart of Chatham Lodging Trust (CLDT) , we can see that prices are below the 50-day simple moving average line. Prices are testing the flat 200-day average line. The on-balance-volume, or OBV, line did not break out to a new high when prices broke out to a new high. The moving average convergence/divergence oscillator generated a liquidate-longs sell signal and is declining toward the zero line for a potential outright sell signal.
In this three-year weekly chart of CLDT, we can see that the stock is back down to the flat 40-week moving average line. The weekly OBV line is not showing much of a pickup this year. Last, the MACD oscillator is just above the zero line but is narrowing towards a new sell signal.
In this daily chart of EPR Properties (EPR) , we can see that prices are pretty extended on the upside. Prices are now pulling back towards the rising 50-day moving average. The OBV line has moved up with the price action, but in the recent new high for the move up in price the OBV line did not make a new high. The bearish divergence might be a tipping point. In the lower panel is the 12-day momentum study, which shows a bearish divergence in July between the higher highs in price and lower highs in momentum.
In this weekly chart of EPR, we can see that prices are above the rising 40-week moving average line. The slow stochastic indicator, a measure of oversold and overbought, is coming down from some extreme overbought readings. In the lower panel is the 12-week momentum study, which is slowing and telling us that prices are struggling at these levels.
In this daily chart of Income Realty (O) , we can see that prices are pulling down to test the 50-day moving average line. The OBV line has been flat the past five weeks. Momentum is showing a bearish divergence to the price action, with the momentum weakening compared with the price action.
In this weekly chart of O, we can see that prices are above the rising 40-week moving average line. The OBV line is positive. Momentum, however, shows equal highs this year even as prices make higher highs. This bearish divergence sets the stage for weaker prices ahead.
In this daily chart of Shaw Communications (SJR) , we can see that prices are above the rising 50-day moving average line but not by much. Prices are above the flat 200-day average. The movement of the OBV line is not impressive and does not suggest that buyers have been that aggressive.
In this weekly chart of SJR, we can see that prices are above the flat 40-week moving average line. The OBV line did not make a new high with the price action. Also we see a bearish divergence between the higher highs in April and July and lower highs from the momentum study.
In this daily chart of Stag Industrial (STAG) , we can see that prices are above the rising 50-day and the rising 200-day averages. The slow stochastic indicator is coming down from an overbought sell signal. The OBV line is pointed up on STAG. In the lower panel is the momentum study with a May, July and August bearish divergence as prices made higher highs but momentum did not. I would look for STAG to weaken in the days ahead.
In this weekly chart of STAG, we can see how stretched to the upside the stock is. The key indicator on this chart is the momentum study, which shows a bearish divergence of lower highs this year vs. higher highs on the price chart.