Tag Archives: covered puts

Linear Tech, (LLTC) – An Undervalued Tech Dividend Stock With Growth Potential

Posted on

By Robert Hauver

If you’re looking for undervalued dividend paying stocks in the Tech sector, you may want to consider Linear Technology, (LLTC), a firm which designs, manufactures and markets integrated circuits in the Specialized Semiconductor sub-sector.  A recent addition to the Tech section of our High Dividend Stocks by Sector tables, LLTC currently has a 3.26% dividend yield, paying $.23/share quarterly.  You can also increase your yield on LLTC, via options trading strategies, such as selling covered calls or selling put options.

LLTC fares well in our Industry Comparison table:

LLTC Semiconductor Industry
P/E 22.24 28.30
Price/Cash Flow/Share 18.92 22.83

ROE

 45.01 10.74
ROA 18.55 8.06
ROI 49.37 9.65
Debt/Equity NO DEBT 19.30

LLTC also offers investors strong prospects for growth. In April, LLTC reported a 100% increase in net income of $.44/share, and a 55% jump in revenue.  Forbes reports that, LLTC’s “trailing 12-month earnings have already replicated its best ever four consecutive quarters”…”subsequent comparisons will necessarily moderate, but likely sustain 25 % to 30% or even higher rates of growth through 2012.” Indeed, using a baseline valuation method, even using a much lower growth rate of 15%, indicates an intrinsic value of $49.36.

Using the current consensus 2011 growth rate of 31% shows a PEG of just .74 for LLTC, which would also indicate that it’s undervalued.

More defensive, income-oriented investors may wish to hedge their bets on LLTC by selling covered calls.  However, they may miss out on a substantial upside gain.

Our Covered Call table lists the Jan. 2011 $30.00 call, which had a bid today of $2.20, an 11.5% annualized yield.  In addition, covered call sellers should receive two dividend payments of  $.23/quarter prior to the Jan. expiration, for a total payout of  $2.66/share.

The total static yield on this 8-month trade would be 9.4%, or 13.9% annualized.  The breakeven on this covered call trade is $25.52.

The potential assigned yield offers an additional $1.06/share, (3.79%), which could increase your total potential assigned yield to 13.29%, or 23.40% annualized.

Alternatively, if you wanted an even lower break-even point, you could sell cash-secured put options. Our Covered Puts table currently lists the Jan. 2011 $25 put, which was bid at $2.05 today, for an 8.2% yield in 8 months, or 12.07% annualized.

This would give you a $22.95 breakeven, which makes LLTC’s $.92/share dividend equate to a 4.1% yield. (These put-selling yields are based upon 100% cash reserve.)  LLTC closed today at $28.18.

Disclosure: No positions at this time.

Disclaimer: This article is written for informational purposes only.

Alexandria Real Estate (ARE)- 4 High Dividend & Option Yields

Posted on

By Robert Hauver

Alexandria Real Estate Equities REIT, (ARE), is the largest landlord for biotech firms in the U.S., which makes it a play on Healthcare.Although its common stock dividend is not very high, (currently a 2.26% dividend yield), there are 4 ways to achieve high single and double-digit yields from this stock:

1.With its juicy options, ARE is listed in our Covered Call tables, with a 14%-plus current yield on its July $65 calls, which are currently bid at $4.20. (ARE closed at $61.88 Friday).

The potential assigned yield for selling these covered calls 10.58% annualized, giving you a total potential yield of 27.19%.

2. Our Covered Put tables list $60 July covered puts at a $5.00 bid, for a 17.50 % annualized yield. (This yield is based on a 100% cash reserve.)

3. Alexandria has a preferred  stock,  AREEP, a cumulative convertible series D stock, that pays $1.75/share per year, in quarterly payments. AREEP is now at $21.75, and has a 7.97% yield. It’s callable in 2013 at $25.

4. Alexandria has another preferred stock, AREPC, a cumulative convertible series C stock, that pays $2.09/share per year, in quarterly payments. Note: This preferred stock is now callable at ANY TIME at $25/share, and it closed at $25 on Friday. This dividend yield is 8.36%.

Note: Many of the free finance sites have very sketchy info on preferred stocks. The online brokerage sites may provide better and more details.

Disclosure: Author long ARE preferred shares

Disclaimer: This article was written for informational purposes only.

A Utility Making The Right Moves – Brookfield Infrastructure Partners

Posted on

By Robert Hauver

If you’re looking for dividend paying stocks with exposure to overseas infrastructure, AND a high dividend yield, Bermuda-based Brookfield Infrastructure Partners, BIP, may be one of the best stocks to check out.

BIP has the highest dividend in the Utilities section of our High Dividend Stocks by Sector tables.  BIP owns electricity transmission systems, timberlands and social infrastructure in North and South America, the United Kingdom and Australia.

By closing a deal with Australian company, Babcock & Brown Infrastructure, BIP is about to make itself even more attractive by acquiring interests in a broad range of infrastructure projects in more key areas.  These new acquisitions include:  Natural gas pipelines in western Australia, a midwestern U.S. gas pipeline, port concessions in China, a coal terminal in Australia, and other gas and electricity distribution assets in the U.K., New Zealand and elsewhere.

BIP compares quite favorably to its peers in the Electric Utilities industry:

Brookfield Infrastructure Partners Electric Utility Industry Avgs.
Debt/Equity Zero Debt 54.00%
Gross Margin 91.67% 33.48%
P/E 7.63 14.89
Price/Free cash/Share 3.08 18.46
ROA 8.50 2.96
ROI 81.46 3.40

BIP pays a $.265/share dividend quarterly, which is currently a 6.78% dividend yield.

There are also options available for BIP, for those interested in covered calls and covered puts, or cash-secured puts. A possible covered call trade would be to sell the June $17.50 strike, (BIPFW), which has a big bid/ask spread of $.60/$1.60.

Conversely, more skeptical investors might sell the June $15.00 put option, BIPRC, for a 10% yield, ($1.50 bid) , or possibly more, since the ask is at $2.50.

Disclosure: No positions yet.

Disclaimer: This article is written for informational purposes only.

“ENP – Another High DIvidend Energy LP” – Oct. 10, 2009

Posted on

By Robert Hauver

Encore Energy’s 12%-plus dividend yield puts it near the top of the heap for solid, high dividend stocks in our free Energy Sector Dividend Tables .

Formed in 2007, and primarily based in the West and Midwest, ENP’s assets consist mainly of producing and non-producing oil and natural gas properties in the Big Horn Basin in Wyoming and Montana, the Williston Basin in North Dakota and Montana, the Permian Basin in West Texas, and the Arkoma Basin in Arkansas.

ENP also ranks very high vs. its Oil/Gas Drilling/Exploration peers for many other metrics:

Click here…to keep reading

Dividends vs. Puts – A Short Term Profit Strategy – Aug. 29, 2009

Posted on

By Robert Hauver

With the S&P 500 up over 50%, and the Dow up over 45% since March 9th, many investors are still on the sidelines, chewing on sour grapes, and still wondering if this incredible rally is going to last.

What can you do if you got left behind by the current rally, but still want to make a profit?

Click here to find out…

Linn Energy – High Dividend, Low Valuation – August 15, 2009

Posted on

By Robert Hauver

If you’re an income investor looking for the best stocks to buy, Linn Energy (LINE) may be one of those dividend paying stocks you should take a long look at.
Linn Energy’s, high dividend yield of over 11% is second only to Martin Midstream Partners in the Independent Oil & Gas group, an industry filled with dividend stocks.

Click here… to continue reading.

Alexandria Real Estate (ARE) – A High Dividend REIT – August 3, 2009

Posted on

By Robert Hauver

Looking for good dividend paying stocks, but feeling left behind by the market’s reawakened rally?  Here are 3 steps you can take to find an undervalued stock that’s been somewhat left behind:

1. Look for an unloved sector: Health Care is only up 7.3% year-to-date, far behind the most of the other sectors, the majority of whom have posted double-digit gains.

2. Look in an unloved income sub-sector, such as the REIT sector:

The Vanguard REIT ETF is down over 11% this year, due to concerns about the refinancing difficulties that REIT’s with heavy short-term debt loads have had in the credit crisis.  (Analysts usually follow FFO, “funds from operations”, to monitor a REIT’s ability to cover its dividend).

Click here… for 4 ways to profit on Alexandria Real Estate…

The Oldest Dividend Paying Stocks in America – Part 4 July 27, 2008

Posted on

By Robert Hauver

The final article in this series covers 2 more venerable dividend paying stocks that offer investors secure dividend payouts.  We also examine various strategies for improving their dividend yields.

Colgate-Palmolive, (CL), and John Wiley & Sons, (JW/A), are 2 very old firms that have a long history of paying out dividends.

Click here… to keep reading.

The Oldest Dividend Paying Stocks in America – Part 3 July 18, 2009

Posted on

By Robert Hauver

In this article, we profile two more of the oldest U.S. dividend paying companies, and examine the best way to increase these yields.

Lorillard, (LO), and Valspar, (VAL), are 2 dividend stocks worth taking a deeper look at.

Click here… to learn more.

Bottom Fishing For High Dividend Stocks – Part 2 – June 7, 2009

Posted on

By Robert Hauver

In Part 1, we found a high dividend paying stock with an excellent balance sheet and many other competitve attributes.  By using a strategy from The Double Dividend Stock Alert, we doubled its already high dividend yield, and achieved a 23%+ cash yield.

But what if you wanted to be even more conservative, but still make money from this member of the high dividend stocks group? Selling put options is another option strategy you can use to achieve a very competitive, short-term high yield.

Click here …to learn more.