Jhe Dividend Channel’s DividendRank formula ranks a coverage universe of thousands of dividend-paying stocks, using a proprietary formula designed to identify stocks that combine two important characteristics: strong fundamentals and a valuation that appears inexpensive. Hercules Technology Growth Capital (Symbol: HTGC) currently holds a stellar rank, in the top 10% of the coverage universe, suggesting that it is among the most “interesting” ideas that deserve further research from the from investors.
But making Hercules Technology Growth Capital an even more interesting and timely stock to watch is the fact that during Tuesday’s trading, HTGC shares entered oversold territory, changing hands as low as 16.36. $ 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 oversold if the RSI reading falls below 30. In the case of Hercules Technology Growth Capital, the RSI reading reached 28.5 – in comparison, the universe of dividend stocks covered by the Dividend Channel currently has an average RSI of 40, 3. A decline in stock prices – all things being equal – creates a better opportunity for dividend investors to capture a higher yield. Indeed, HTGC’s recent annualized dividend of 1.32/share (currently paid in quarterly installments) corresponds to an annual return of 7.98% based on the recent share price of $16.54.
A bullish investor might view HTGC’s RSI of 28.5 today as a sign that the recent strong sell-offs are running out and starting to look for entry point opportunities on the buy side. Among the fundamental data points dividend investors should investigate to decide if they are bullish on HTGC is its dividend history. In general, dividends are not always predictable; However, examining the chart below can help determine if the most recent dividend is likely to continue.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.