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Triangle Capital Becomes Oversold
12/09/2014 7:00 am EST
The staff at DividendChannel.com thinks the fact that this business development company (BDC) entered oversold territory on Monday means it merits further technical analysis by chartists and more research and attention from dividend stock investors.
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. Triangle Capital Corporation (TCAP) presently has a stellar rank, in the top 10% of the coverage universe, which suggests it is among the top most interesting ideas that merit further research by traders and investors.
But making Triangle Capital Corporation an even more interesting and timely stock to look at is the fact that in trading on Monday, shares of TCAP entered into oversold territory, changing hands as low as $20.01 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.
In the case of Triangle Capital Corporation, the RSI reading has hit 26.8. A falling stock price—all else being equal—creates a better opportunity for dividend investors to capture a higher yield. Indeed, TCAP's recent annualized dividend of 2.16/share (currently paid in quarterly installments) works out to an annual yield of 10.16% based upon the recent $21.28 share price.
A bullish investor could look at TCAP's 26.8 RSI reading Monday 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 data points dividend investors should investigate to decide if they are bullish on TCAP 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.
By the Staff of DividendChannel.com
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