Investing for Dividends in the Canadian Oil Patch

One of the best ways to make money investing is to buy cheap and sell high. It's not really any more complicated than that, is it?

Human nature being what it is when it comes to stock investing the opposite is true. The herd seems to stream in when prices start to rise. It really is quite the dichotomy when buying any other asset under the sun. 

The other strategy I try to employ is to look in those areas that have been beaten down and stocks that nobody seems to want.

One of those areas I have been looking in is the Canadian Oil Patch. So many issues combined with declining prices you would seem to believe the whole industry is going into the dumpster. I recently purchased the following dividend paying oil stocks a little over a month ago.

ARX Arc Resources

Price paid - $6.70

Current price - $8.26

Dividend Yield - 7.3%

Current Gain = 23%

I am looking to exit the stock if it makes it to $9.35

That's only another dollar from here. The stock has been as high as $10.49 during the last year. I like the risk reward profile here while collecting a monthly dividend of 5 cents a share. I own 600 shares.

TOG Torc Oil and Gas

Price paid - $3.68

Current price - $4.48

Dividend Yield - 6.7%

Current Gain = 21%

I am looking to exit the stock if it makes it to $5.37

That's close to a dollar from here. The stock has been as high as $5.46 during the last year so it's hitting lots of resistance soon. I like the risk reward profile here while collecting a monthly dividend of 2 cents a share. I own 1000 shares.

WCP Whitecap Resources

Price paid - $3.68

Current price - $4.48

Dividend Yield - 6.7%

Current Gain = 39%

I am looking to exit the stock if it makes it to $8.75 or maybe sooner as I've already made a decent percentage here. The stock has been as high as $5.98
I like the risk reward profile here while collecting a monthly dividend of 2 cents a share. I own 1000 shares.

So there are 3 ideas for collecting dividends while also realizing some capital gains in the Canadian Oil Patch. I hold all these stocks in my open account and would never invest my retirement money in commodities. It's just too volatile to set it and forget it.

Of course there are other oil stocks to buy and invest in. I just believe there is more juice here than the major players like CNQ, VET and SU. I don't want to own what everyone else has already. Go where they ain't.

I change my mind at the drop of a hat so if these trades start to go the other way, I'm out. I just have to decide when enough is enough.

With all the political turmoil and Mid East tension maybe this continues to reap some gains. I have no idea and I just watch what the individual stocks are doing. All dividends will be paid on 15 January. I've already received my December payout.

This is just what I'm doing and by no means what you should be doing. Only meant as an area that seems to me to be cheap while collecting or adding to  your monthly income.

Go boldly where no man or woman wants to go. Look for those stocks nobody wants.

If you want more solid ideas on how to invest for dividends and grow your income in retirement you need to pick up Henry Mah's book. 

Henry has written another book on investing and compounding inside your TFSA. Review to follow in the coming weeks. Are you invested in the oil patch?