How To Grab A Fast Double-Digit Yield From This Dow Dividend Stock

Posted on May 1, 2013

by Robert Hauver
Dow dividend stock IBM, (IBM), is going ex-dividend next week, on 5/8/13:

IBM dipped below $200.00 again today, 5/1/13, which sets up a high yield, short-term covered call trade:

There are 3 potential income scenarios to this 2-week trade, all of which pay you at least a $2.08/share call option premium:
1. Static – IBM’s share price isn’t above $200.00 at or near expiration, and your IBM shares don’t get assigned/sold. You receive the $2.08 call premium and the $.95 dividend.
2. Assigned before the ex-dividend date- IBM’s share price is above $200.00 before 5/8/13, and your IBM shares get assigned/sold. You receive the $2.08 call option premium, and the price gain of $.37, but not the $.95/share dividend.
3. Assigned after the ex-dividend date- IBM is above $200.00 after 5/8/13, and your IBM shares get assigned/sold on or near the 5/17/13 expiration date. You’d receive the $2.08 call option premium, the $.95/share dividend, and the price gain of $.37:

You can see more details for this and over 35 other high yield options trades in our free Covered Calls Table.

Cash Secured Puts: We also list a short term put-selling trade for IBM which offers a 13.5% annualized yield, in our free Cash Secured Puts Table.

Earnings: IBM got beaten up after its most recent quarterly earnings report disappointed – revenue fell 5%, and diluted normalized EPS fell 7.2%. However, the 15% earnings estimates for 2013 are still strong enough to give it an undervalued 2013 PEG ratio:

Financials: Although it has more debt, IBM’s Mgt. Efficiency ratios are very superior to its peer industry’s averages. This cash cow also has an Interest Coverage ratio of over 35., and also has a 5-year Dividend Growth Rate of over 17%.

Other Valuations: Like many Dow dividend stocks, IBM commands a premium Price/Book value vs.its peers:

Disclaimer: This article was written for informational purposes only and is not intended as investment advice.
Disclosure: The author was short IBM put options at the time of this writing.

An Energy Dividend Stock WIth High Options Yields

Posted on February 4, 2013

by Robert Hauver

Energy Services stock Halliburton, (HAL), has risen over 18% in 2013, and is up nearly 35% since the November 15th lows. This is in spite of the fact that HAL recently posted 4th quarter 2012 earnings that were 32% lower than 2011 4th quarter earnings.

HAL’s 2012 full year earnings fell in its biggest region, North America, but rose in its other regions:

What are investors seeing? Analysts are predicting nearly flat 2013 sales, BUT, they’re forecasting 2014 sales to rise substantially, up 32%, which gives HAL a very low .42 2014 PEG ratio:

Dividends: HAL is certainly not a high dividend stock - it has kept its quarterly dividend at just $.09 since 2007, and yields under 1%:

High Options Yields: However, you can still earn good income from HAL, via selling options. We’ve listed below a short term trade for HAL, from our free Covered Calls Table. This April $41.00 call option pays over 18 times HAL’s quarterly dividend amount:

With HAL being so near its 52-week high, you may want to consider a more defensive way of trading it. Like selling covered call options, selling cash secured puts gives you immediate income, and a lower break-even cost, if you sell them below or close to the stock’s share price.

You can find more details on this and over 30 other put trades in our free Cash Secured Puts Table. The put income for this April trade is higher than the call income, and this put also pays much more than HAL’s quarterly dividend. (Note: Put sellers don’t receive dividends – we only list them on our tables for comparison.)

Financials: Although it has a lower Operating Margin, HAL’s Mgt. efficiency and Debt ratios are better than its industry’s averages.

Disclosure: The author held no Halliburton shares at the time of this writing.

Disclaimer: This article was written for informational purposes only and isn’t intended as investment advice.

Two Industrial Dividend Stocks With 30% Covered Call Yields

Posted on August 10, 2012

Standard Motor Products, (SMP), and Worthington Industries, (WOR), are both on a roll this summer, having rallied significantly since the June 4th lows:

Dividends: SMP goes ex-dividend next week, and WOR goes ex- in early September:

Covered Calls: As you may have noticed on the 2 charts above, both SMP and WOR are currently showing as being overbought on their respective stochastic charts. This overbought condition often offers the best covered call option yields, and also helps to lock in some of your profits. Both of these dividend stocks currently have very high options yields for their covered calls.

Here are are 2 trades from our Covered Calls Table:

Even though SMP and WOR aren’t high dividend stocks, their options pay out over 6 times their dividend amounts in these 2 trades. The WOR covered call is in the money, with a strike price that’s slightly lower than SMP’s $22.53 price per share. The SMP price is above SMP’s price per share, and thus offers an potential assigned yield of 7.64%, ($.34/share difference between the $17.50 strike price, and SMP’s $17.16 share price.) The SMP is a longer term trade, expiring on November, hence its lower annualized yield:

Disclosure: Author had no positions in any of the stocks mentioned in this article at the time of this writing.

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Worthington Industries Is On A Roll

Posted on July 13, 2012

by Robert Hauver

Looking for dividend stocks with market support?

Steel and Metal processor Worthington Industries, (WOR), has been on a roll since the June 4th lows, rising over 42%, vs. the S&P, which has gained approx. 6%. This dividend stock has done better than the Steel & Iron industry, which is up approx. 4% since June 4th, but is still down 9% for the year, vs. WOR’s big 36.72% gain:

Earnings Growth: A big part of the attraction for WOR stems from its EPS growth figures, which show it to still be undervalued on a PEG basis for next year’s earnings: Click here to read more…

Disclosure: Author had no positions in WOR at the time of this writing.

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Halliburton – An Undervalued Blue Chip Dividend Stock

Posted on July 6, 2012

By Robert Hauver

Looking for undervalued dividend stocks? Energy stocks have emerged as the Rodney Dangerfields of the market in 2012, being the only sector that’s still down, (-2.92%), after this new summer rally. However, the sector has pulled an impressive reversal, gaining over 8% since the June 4th lows. Halliburton, however, hasn’t joined in the fun yet, losing -1.52% since June 4th, and is now down almost 14% year-to-date, as of 7/6/12:

HAL-PERF

In addition to being in an out of favor sector, Halliburton’s 2012 earnings are flat, but, if you look to 2013, the picture gets brighter – HAL’s EPS is estimated to grow at over 10%. Couple this with its historically low range P/E of 8.72, and you have undervalued growth. We also ran a discounted model for future Earnings growth, with a risk-free rate of 13%, and came up with an intrinsic value of $61.00 for Halliburton.

HAL-PEG

Option trading strategies vs. dividends: Although HAL isn’t listed in our High Dividend Stocks By Sector Tables, it does have some high options yields.

The covered call trade listed below expires in October, and offers a call option premium of $1.68, over 18 times the dividend amount. Since the $30.00 strike is $.93 over HAL’s current strike price, there’s an additional potential assigned yield of over 11% annualized.

Click here to read more…

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Schlumberger Just Sent A Buy Signal

Posted on June 29, 2012

By Robert Hauver

Buy Signal- Schlumberger dipped below the oversold 20 line on its Stochastic chart, but just crossed back above the line this week, which is seen by chartists as a buy signal:

SLB-CHART

Schlumberger, (SLB), is the world’s largest oilfield services provider, whose $83 billion market cap dwarfs those of its competitors, such as Halliburton and Baker Hughes. Like most Basic Materials/Energy-related stocks, SLB has been getting hammered this year, due to a number of factors – slowing Chinese and US growth, Eurozone problems, and declining oil prices. However, the oil price decline is a 2-edged sword, because some of that decline is due to the new shale oil discoveries that are being exploited via fracking in the US, which is Schlumberger’s biggest and most lucrative market:

Click here to read more…

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

VF Corp, A Dividend Stock WIth A 20% Option Yield

Posted on June 22, 2012

By Robert Hauver

VF Corp., (VFC), has been one of the best stocks to buy this year for price gains, having outperformed the market thus far in 2012, and is only 9.06% off of its 52-week highs.VFC is among the top 20 Consumer Goods dividend stocks for 2012 performance.

VFC is a $9 billion apparel and footwear powerhouse, with a very diverse, international portfolio of brands and products, including such well known brands as Lee, Nautica, Wrangler, North Face, and Timberland.

VFC-BETA

With its 2.06% dividend yield, VFC isn’t really part of the high dividend stocks universe, but you can vastly improve upon its dividends by selling covered calls or cash secured puts.

Here’s a covered call trade for VFC, that’s listed in our Covered Call Table, along with over 30 other trades with high options yields. Click here to read more…

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

BHP Billiton – An Undervalued Basic Materials Dividend Stock

Posted on June 8, 2012

By Robert Hauver

Looking for undervalued dividend paying stocks? Like many Basic Materials stocks, BHP Billiton PLC, (BBL), has been under under pressure in 2012, due to slowing growth and tightening financial policy in China. However, the Chinese government has begun loosening its policies, in order to keep growth moving near their targeted 7.5% GDP rate, which should help Basic Materials stocks such as BBL regain some of their luster.

Undervalued Growth: BBL, whose fiscal year ends 6/30/12, looks undervalued on a PEG basis for 2012 and 2013:

Click here to read more…

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Cummins – An Oversold And Undervalued Dividend Stock

Posted on June 1, 2012

By Robert Hauver

The market has fallen out of love with stalwart Industrial dividend stock Cummins, (CMI), sending its shares down over 16% in May. Lowered guidance from fellow equipment maker Joy Global, (JOY), has also helped to depress CMI’s shares this week. JOY cut its guidance approx. 3.4 to 4.5%, down to a $7.15 to $7.45 range, and trimmed its revenue guidance by approx. 1.8%, based on weaker mining equipment demand from US coal miners.

Here’s the anomaly and the opportunity: JOY’s coal mining equipment business is slowing in the US because of the ongoing natural gas boom, which is causing utility and other power users to switch from more expensive, dirtier coal, to cheaper, cleaner natural gas. BUT, as the biggest natural gas and hybrid bus engine manufacturer in the US market, Cummins will gain from this shift from coal to natural gas, as more fleet owners switch to these natural gas and hybrid engines.

How to play it: Click here to read more…

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

Disney – An Undervalued Dividend Stock With Growth

Posted on May 25, 2012

By Robert Hauver

Looking for dividend paying stocks with growth at a reasonable price? The Walt Disney Co., (DIS), which is in the fast-growing Diversified Media industry, has bettered its peers in 2012 for share performance. However, Disney still looks undervalued, on a PEG basis, due to its growth prospects:

DIS-PEG

DIS-BETA

Disney is currently cashing in big-time on the huge hit, “The Avengers”, which has grossed $1.18 billion so far in global ticket sales, making it Disney’s biggest grossing movie of all time, even higher than any of its successful “Pirates Of The Caribbean” films – sorry pirates… One of Disney’s major ongoing strengths is its ESPN cable franchise, which is the highest paid cable network around, netting over 4 times what other cable channels get paid. Click here to learn more…

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.