Understanding the Entry Timing Indicator
The Entry Timing indicator measures how far a stock has fallen from its 52-week high. Significant pullbacks in quality dividend stocks often present buying opportunities for income investors.
What It Measures
The 52-week drawdown shows the percentage decline from the highest price in the past year. A -20% drawdown means the stock is trading 20% below its peak.
How to Read the Status
| Status | Drawdown | Meaning |
|---|---|---|
| 🟢 Good | ≥ 20% off high | Significant pullback — potential buying opportunity |
| 🟡 Neutral | 10-20% off high | Moderate pullback from highs |
| 🔴 Bad | < 5% off high | Trading near 52-week highs — limited discount |
Why It Matters for Dividends
When quality dividend stocks drop without cutting their dividend, you get:
- Same dividend payment at a lower price = higher yield
- More shares for the same investment amount
- Potential capital appreciation when price recovers
What to Do
- Good: Investigate why the stock dropped. If dividend remains intact, may be excellent timing.
- Neutral: Some discount available. Consider dollar-cost averaging.
- Bad: No discount. Not necessarily a bad stock — just not a discounted entry.