In trading on Tuesday, shares of Domtar Corp (NYSE:UFS) entered into overbought territory, changing hands as high as $87.60 per share. We define overbought territory using the Relative Strength Index, or RSI, which is a technical analysis indicator used to measure momentum on a scale of zero to 100. A stock is considered to be overbought if the RSI reading rises above 70.
In the case of Domtar Corp, the RSI reading has hit 71.0 — by comparison, the universe of dividend stocks covered by Dividend Channel currently has an average RSI of 61.4.
Investors could look at UFS's 71.0 reading as a sign that the recent heavy buying is in the process of exhausting itself, which could bring a pullback in the stock. The chart below shows the one year performance of UFS shares:
Looking at the chart above, UFS's low point in its 52 week range is $62.28 per share, with $105.82 as the 52 week high point — that compares with a last trade of $87.59.
Among the fundamental datapoints dividend investors should investigate to decide if they are bullish on UFS is its dividend history.
In general, dividends are not always predictable; but, looking at the history chart below can help in judging whether the most recent dividend is likely to continue.
UFS Dividend History
* Data may be adjusted for splits; we are not responsible for data errors; always verify data with the company.
UFS operates in the Paper & Forest Products sector, among companies like International Paper Co. (NYSE:IP) which is up about 1.9% today, and MeadWestvaco Corp. (NYSE:MWV) trading higher by about 1.5%. Below is a three month price history chart comparing the stock performance of UFS, versus IP and MWV.
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