When should you sell Terra Nitrogen (TNH) if you own it or are considering shorting it? Terra Nitrogen's stock price has increased 43.6% in the past year while the S&P 500 has only risen 0.9%. I don’t know why the stock’s price has rocketed since April 2011.
http://stockcharts.com/h-sc/ui?s=TNH&p=W&b=5&g=0&id=p33864843115
The stock is currently yielding 8.1% at today's price of $183.38 per share. It is now paying a $3.75 quarterly dividend on $3.95 in earnings per quarter. This brings the dividend payout ratio up to a worrying 95%. I like dedicated dividend payouts of between 50% and 80% (dedicated, but not too high).
TNH has an average adjusted earning power of $9.97 over the past five years. Consider buying at or below $119.64 (12 times average adjusted earnings). Consider sell at or above $ $199.40 (20 times average adjusted earnings). It is almost sell time.
Their balance sheet is strong. To read the other articles I’ve written on Terra Nitrogen click here: http://www.myhighdividendstocks.com/category/high-dividend-stocks/terra-nitrogen
Disclosure: I don’t own Terra Nitrogen (TNH).
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