Just last week I posted about the dividend on $UWMC. I had provided a bunch of quotes from leadership about keeping the dividend, but this week has caused me to lose faith. Down 5% today, this sucker just keeps dropping.

I was using $UWMC as a way to experiment with writing covered calls. At their cheap prices, it is easy to accumulate 100 and sell some covered calls. I learned a lot doing it. I also learned that stability in stock price and market cap is important to selling covered calls as well.

After watching this stock tank week after week. I had a change of heart and decided to get out. The yield is getting too high, sentiment for upcoming earnings is not great, the housing market is slowing, and I took a closer look at the companies balance sheet and am not comfortable with their debt levels and their decreasing revenues. In Q4 of 2021 their gross profit was $742M and their current portion of long term debt was $1,120M... obviously something's got to give. If they can't grow revenues in this contracting market, they will look to cut costs in other areas. Losing all this capital was not worth having the opportunity to learn about writing calls.

Finally, as a dividend investor, you constantly see people saying "don't chase yield" or to look out for yield traps. This was my only high yield position (that isn't an ETF), and boy were the sayings right! My confirmation bias on this position was STRONG, but the losses have finally become too much that I have realized the error of my approach with this position.

Though this is a mistake and a set back on the success of my portfolio, it is a great learning experience and an early one. I will have ample time to make up for it and build stronger dividend paying positions in better companies.

I've sold today and rolled that money into other positions in $T, $MMM, $INTC, and $SBUX.

https://commonstock.com/post/dc9655fc-6bc3-4086-a048-9567b7ea37e3 by @dividenddollars