With most dividend paying stocks taking a dip on Friday, you might expect me to find something that I’d like to add to my portfolio. Or something where I think now is the time to add to may stake.

Today, I’m sitting on the sidelines instead, partly because I’m worried that concern about rising interest rates will continue to pressure dividend stocks.

I have been eyeing a retail stock, but lost some of my enthusiasm after reading an analyst report on the company.

I was reminded of something Jim Cramer said on CNBC this week. Asked if he’d recommend buying LB (parent of Victoria’s Secret) for it’s roughly 9% dividend, and Cramer quickly dismissed the idea, saying he’d never recommend buying shares in a troubled company just because of a high dividend yield.

I think that’s sound advice. (Take it from me – I was buying shares of GE at $25 thinking it can’t go any lower than this.) Once in a while you see a company that’s restructuring or rebuilding, but you want some insight into how well a turnaround plan is faring before you buy. With that in mind, I’ll keep an eye on my retail favorite and let you know if I want it in my portfolio at some point in the future.

Having endorsed Cramer’s viewpoint, I do recall one stock I bought just for yield that turned out, over the long haul, to be a good move. Quite a few years ago, World Wrestling Entertainment – yes, the pro wrestling company – was paying a yield of over 6%, but share prices were dropping because analysts questioned whether or not the company had enough cash flow to continue that payout rate. I bought shares in the low to mid-teen price range, thinking a possible dividend cut was already priced into the stock. Low and behold, the company did slash its payout rate and the stock fell even further.

Luckily, I hung in there. Today, WWE is trading at about $88 a share. While the company’s half a percent dividend yield won’t attract income seeking investors today, it turned out to be quite a growth opportunity. The company’s shares are up nearly three fold from the start of the year, bolstered by a new broadcasting deal that pleased investors. Admittedly, I think the shares may be overpriced at this level, and I’ve been trimming my holdings in recent months.

Now if only WWE execs could counsel GE on its turnaround strategy.

• Uncategorized