Starting with picks from the Healthcare section of our High Dividend Stocks by Sector tables, we ran a screen for Healthcare stocks with the highest yields from a combination of the highest dividend yield and covered call options.
We came up with the following 4 firms:
|
Company |
11/05/09 Price |
Dividend/Share (pre-expiration) |
Dividend % |
Covered Call Expiration/ Strike Price |
Covered Call Options/Premium |
Covered Call % |
Total Nominal Static Yields |
Annualized Yields |
|
Astra Zeneca (AZN) |
$44.82 |
$1.50 |
3.35% |
April $45 |
$2.60 |
5.80% |
9.15% |
21.95% |
|
Merck (MRK) |
$32.83 |
$0.76 |
2.31% |
April $34 |
$1.80 |
5.48% |
7.80% |
18.71% |
|
Lilly (LLY) |
$34.39 |
$0.49 |
1.42% |
April $35 |
$1.95 |
5.67% |
7.10% |
17.03% |
|
Glaxo Smith Kline (GSK) |
$40.33 |
$0.98 |
2.43% |
May $42.50 |
$1.90 |
4.71% |
7.14% |
14.28% |
Within this group, Astra Zeneca and Merck also appear to have the best combination of debt load, management effectiveness, and valuation ratios. As always with high profile stocks, there may be many other contributing factors that will weigh upon these companies’ futures. This is particularly true in the Healthcare industry, with the advent of a major healthcare reform bill in the U.S., plus periodic FDA drug reviews, and litigation that often move big pharma stocks’ prices. In addition, this industry has been undergoing consolidation recently, as firms move to shore up their drug pipelines.
If you’re skeptical about the future of Healthcare stocks, but you still want to “nip at the edges” for profits, you might consider selling cash-secured puts against the ones your research pinpoints as the best stocks.
There are some current put yields on display for some of these and other sectors’ stocks in our Covered Puts Table .
Disclosure: No positions
Disclaimer: This article is written for informational purposes only.
Tags: AZN, best stocks, call options, covered call, covered calls, dividend, dividend paying stocks, dividend yield, GSK, high dividend stocks, LLY, mrk
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