2 Dividend Paying Stocks With High Yield Covered Calls

by Robert Hauver
Although we often cover high dividend stocks, this article will focus on 2 dividend paying stocks which have only average dividend yields. However, they both have high options yields for their covered calls and cash secured puts, which more than make up for their dividends. In fact, these calls and puts pay over 14 times the amount of these stocks’ upcoming quarterly dividends. The second pick, listed at the bottom of this article, has 40%-plus annualized yields on both its covered call and cash secured put options.

1. Whirlpool Corp., (WHR), founded in 1898, manufactures and markets home appliances worldwide. The company’s principal products include laundry appliances, refrigerators and freezers, cooking appliances, dishwashers, mixers, and other portable household appliances. It also produces hermetic compressors for refrigeration systems. The Whirlpool brand is the world’s No. 1 global appliance brand. Whirlpool also owns many other marquee brands, including Maytag, Kitchen-Aid, Jenn-Air, and Amana.

WHR’s price/share has had quite a run up over the past year:
WHR-PERF1113
Most likely due to its quickly growing sales, which have outrun its price/share, and make it still appear undervalued on a PEG basis:
WHR-PEG NOV
WHR has a modest dividend yield…
WHR-DIV1113
But its covered calls have much higher yields. In the trade below WHR’s calls outpay its dividends by over 16 times :
WHR-CALL nov
There are 3 main scenarios for this covered call trade:
WHR-CALLINC NOV
You can see more info for this and over 30 other covered call trades in our free Covered Calls Table.
WHR’s put options also have a big payout that’s much higher than its dividends:
WHR-PUT nov
You can find more details for this and over 30 other cash secured put trades in our free Cash Secured Puts Table.

2. Questcor Pharmaceuticals, (QCOR), is a biopharmaceutical company, which provides drugs for the treatment of multiple sclerosis, nephrotic syndrome, and infantile spasms indications. It primary product is H.P. Acthar Gel, for which there are several FDA-approved applications. QCOR has enjoyed huge growth over the past 5 years, growing its revenues over 59%, and its EPS by nearly 44%. Its trailing 12-month EPS growth now stands at nearly 65%, and its revenue has grown by almost 69%.
Like WHR, QCOR has had a big run up in its share price over the past year – it’s up 164% from its 52-week low, and now is around 15% below its 52-week high. It has pulled back from its high of $74.42, due to concerns about an ongoing government investigation into its promotional practices. This concern has also led to high short interest of over 21%. However, it may take around 3 years for this case to play out.

In the meantime, QCOR has some very high options yields, which dwarf its dividend yield:
This Covered Call trade expires in April, and pays $10.70, a nearly 40% annualized yield.

(This trade is also listed in our Covered Calls Table):
QCOR CALL NOV
QCOR also has high yield cash secured puts. The April trade below offers you a nearly 44% annualized yield, and also gives you a breakeven that’s over 22% below QCOR’s price/share.
QCOR-PUT NOV
(This trade is also listed in our Cash Secured Puts table. All of our options tables are updated throughout the trading day.)

Author: Robert Hauver, copyright 2013 DeMar Marketing, All Rights Reserved.
Disclosure: Author was hort QCOR put options at the time of this writing.
Disclaimer: This article was written for informational purposes only. Author not responsible for any errors, omissions, or actions taken by third parties as a result of reading this article.