Triangle Breakout: ‘High Dividend’ Stock with ‘High Upside’!

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Aayush Khanna/Investing.com - Investing.com

The broader markets continue their weakness on Thursday and the metal space is following the trail. The Nifty Metal index is down 0.3% to 5,836, by 2:19 PM IST, however, there is one outperformer in this space that is showing no signs of weakness.

The company is Vedanta Limited (NS: VDAN ), a large-cap natural resources company with a market capitalization of INR 1,08,103 crores. It is the highest dividend-paying company in this space, with a current yield of a massive 30.6%. It’s almost impossible to find a large-cap stock with such a gigantic dividend yield. In fact, the next payout of INR 18.5 has already been announced, the ex-dividend date of which is 30 May 2023 and that is probably the reason for a buying frenzy in this counter despite a visible sectoral weakness.

Image Description: Daily chart of Vedanta with volume bars at the bottom

Image Source: Investing.com

The stock had been consolidating in a narrowing range since the beginning of March 2023. This range eventually took the shape of a symmetrical triangle chart pattern. This is a volatility contraction pattern that is known to propel the stock sharply amid a breakout. Today, the stock jumped 1.6% to INR 296 and is clearly starting to trade above the falling trendline resistance of the pattern.

Although the breakout had been witnessed a couple of sessions back, today’s follow-up move to almost a 3-month high is further building confidence in the up move. The added incentive of a massive dividend which is roughly 6.1% of the CMP is another reason for the expectation of continuation of the move.

As per the current pattern breakout, the stock now holds the potential to rally to INR 320 in the immediate future. However, as the ex-dividend date is near, the corporate action will distort this pattern so traders have to calculate the remaining move till INR 320 prior to the corporate action and add it to the price after the ex-dividend date to arrive at the estimated target.

Read More: Watchlist: Stock Jumps 7%, Volume Surges Over 400%!

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  • Suraj Baid @Suraj Baid
    Following u ..from last 8 months ..and very satiesfied with your calls..thanks 😍😍🤗🤗
    Like 1
    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      I am glad you are satisfied but these are not calls, just analyses :) Never forget to manage your risk.
      Like 0

      • Comment Guidelines

      We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

      • Enrich the conversation
      • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
      • Be respectful. Even negative opinions can be framed positively and diplomatically.
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      • Avoid profanity, slander or personal attacks directed at an author or another user.
      • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
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  • karthikeyan arjunan @karthikeyan arjunan
    how to calculate the target after ex dividend date
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    • Aayush Khanna/Investing.com @Aayush Khanna/Investing.com
      Add the remaining distance till the target to the ex-dividend price.
      Like 0

      • Comment Guidelines

      We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

      • Enrich the conversation
      • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
      • Be respectful. Even negative opinions can be framed positively and diplomatically.
      •  Use standard writing style. Include punctuation and upper and lower cases.
      • NOTE: Spam and/or promotional messages and links within a comment will be removed
      • Avoid profanity, slander or personal attacks directed at an author or another user.
      • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
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  • sandeep saini @sandeep saini
    No strength seems
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  • namami ghosh @namami ghosh
    yippie yippie yay yay!
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