RSI alert: Columbia’s banking system is now oversold

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Jhe RankDividend formula to Dividend channel ranks a coverage universe of thousands of dividend-paying stocks, according to a proprietary formula designed to identify stocks that combine two important characteristics – strong fundamentals and a valuation that appears inexpensive. Columbia Banking System Inc (Symbol: COLB) currently ranks highly in the top 25% of the coverage universe, suggesting that it is among the most “interesting” ideas worth investigating by investors.

But making Columbia Banking System Inc an even more interesting and timely stock to watch is the fact that during Tuesday’s trading COLB shares entered oversold territory, changing hands as low as 29.66. $ per share. We define oversold 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 oversold if the RSI reading falls below 30. In the case of Columbia Banking System Inc, the RSI reading reached 29.9 – by comparison, the universe of dividend stocks covered by Dividend channel currently has an average RSI of 45.5. A decline in stock prices – all things being equal – creates a better opportunity for dividend investors to capture a higher yield. Indeed, COLB’s recent annualized dividend of 1.2/share (currently paid in quarterly installments) corresponds to an annual return of 3.97% based on the recent share price of $30.19.

A bullish investor might take COLB’s RSI of 29.9 today as a sign that the recent strong selloffs are running out and starting to look for entry point opportunities on the buy side. Among the fundamental data points dividend investors should investigate to decide if they are bullish on COLB is its dividend history. In general, dividends are not always predictable; However, examining the chart below can help determine if the most recent dividend is likely to continue.

Click here to find out what 9 other oversold dividend stocks you need to know »

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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