Stock Market News: 7-10-21

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Market Indexes: It was another up week for most of the indexes once again, except for the Russell 2000, which fell -1.23%. In a short week, the market seesawed, as the narrative shifted to fears that economic growth’s pace may have peaked, due to Delta variants which might cause another round of restrictions that would weigh on global economic activity.
The DOW, S&P, and the NASDAQ all closed at record highs.

Looking for additional income? You can enhance dividend income with option premiums, with much higher yields. Check out the new high yield options trades on our Public Cash Secured Puts Table and our Public Covered Calls Table.

Volatility: The VIX rose 7.4% this week, ending the week at $16.18.

High Dividend Stocks: These high dividend stocks go ex-dividend next week: ARR, CODI, FSP, MVO, PFLT.

Market Breadth: 14 out of 30 DOW stocks rose this week, vs. 19 last week. 43% of the S&P 500 rose, vs. 70% last week.

FOREX: The US $ fell vs. the Yen, the Swiss Franc, the Pound, and the Euro, and rose vs. the NZ and Aussie $, and the Loonie.

Our Latest Seeking Alpha Articles:
“Capital Southwest: 8% Yield, Extra Dividends Keep Coming”(FRIDAY)

“PetMed Express: Top Dog For Pet Dividends – Pet Industry Review” (SUNDAY)

Economic News: “The yield on 10-year Treasury bonds fell to 1.29% on Thursday, down from a recent high of 1.75% at the end of March and the fourth straight trading day of decline. The closing price of inflation-protected bonds implied expectations of consumer price inflation at 2.25% a year over the coming decade, down from 2.54% in early May.

Moreover, there is a reasonable argument that the economy will be better over the medium term if it experiences moderate growth and low inflation, as opposed to the kind of breakneck growth — paired with shortages and inflation — seen in the last few months.

The Institute for Supply Management’s report this week showed that the service sector was continuing to expand rapidly in June, but considerably less rapidly than it had in May. Anecdotes included in the report supported the idea that supply problems were holding back the pace of expansion.” (NY Times)


Week Ahead Highlights: Core CPI and Consumer Sentiment reports are due out next week, along with June Retail sales, and Industrial Production reports.
Q2 ’21 Earnings season kicks off, with 3 DOW stocks reporting: Goldman Sachs, JPMorgan, and United Health. Several other big banks will report, including Citi, Wells Fargo, USB, Bank of America, and PNC.

Next Week’s US Economic Reports:

Sectors: The Real Estate sector led this week, while the Energy sector lagged. Energy continues to lead all sectors by a wide margin so far in 2021.

Futures: WTI Crude fell -.71%, ending at $74.63.
“Oil prices rose for a second day on Friday as the market reacted to falling U.S. inventories, and signs of strong Asian demand from both China and India added support.
“The market is coming to grips with the historic drop in U.S. oil inventories, and dimmed prospects of Iranian oil returning to the market,” said Phil Flynn, senior analyst at Price Futures Group in Chicago.
Still, prices on both sides of the Atlantic ended the week little changed, despite significant daily fluctuations. Prices were weighed down early in the week by the collapse of output talks between the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, together known as OPEC+.” (Reuters)

2 Blue Chip Dividend Stocks Going Ex-Dividend Soon, With High Options Yields

by Robert Hauver
Looking for a safe way to increase your yields?
Our investing service has been specializing in combining options-selling with high dividend stocks since 2009.

Our Covered Calls Table features over 25 covered calls trades, which we update throughout each reading day. Two trades that caught our attention this week are for blue chip dividend stocks Boeing, (BA), and Intel, (INTC).

Both BA and INTC go ex-dividend in early August:  BA goes ex-dividend ~8/9/18, and INTC goes ex-dividend ~8/6/18. They both have conservative payout ratios, but a relatively low dividend yield.

Although neither one is in the realm of high divided stocks, you can make up for that, via selling covered calls. The August quarterly dividends make for an attractive setup for these covered call plays.
For BA, we chose a $365.00 call strike which is ~3% above its current $354.44 price/share. This call strike pays $5.20, with a tight bid/ask of $5.20/$5.30.
The $5.20 call option payout is ~3X BA’s quarterly $1.71 dividend. It transforms it from a ~7% annualized yield to a ~21% annualized yield, since the trade has just 25 days until it expires.

Here’s a breakdown of the 3 profitable scenarios for the BA trade. Since the $365.00 call strike is $10.56 above BA’s price/share, there’s ample compensation for potentially missing out on the quarterly $1.71 dividend, if the shares rise to $365.00 and get called away prior to the August ex-dividend date. We listed the nominal yields for each scenario:

The INTC trade is right at the money, with a $52.50 call strike, vs. INTC’s $52.30 price/share. The call bid of $1.44 is well over 4X INTC’s $.30 quarterly dividend.

Since both BA and INTC have had very strong price gains in the past year, and are fairly close to their 52-week highs, here’s another strategy to consider.
We’ve added these August put-selling trades to our Cash Secured Puts Table, which has over 30 trades that are updated throughout each trading day.
The August $345.00 BA put strike pays $6.40, which is well over 3X BA’s quarterly dividend, and offers a breakeven of $338.60.
The INTC August $50.00 put pays $.81, which is over 2X INTC’s $.30 quarterly dividend, and has a breakeven of $49.19.
There are plenty of other Put option and Call option strike prices you can choose from. As you get further away, (higher) from the underlying stock’s price/share, the call option bid premiums are lower in value. Conversely, lower put strikes don’t pay as much as those which are closer to the underlying stock’s price/share. One other note – put sellers don’t receive dividends.

As we noted above, both BA and INTC have had quite a price run over the past year – BA is up 68.77% and INTC is up 49.38%.

Price Targets:
At their current prices, both BA and ~12% below analysts’ consensus target prices.

That bodacious ROE figure for BA isn’t a typo – BA’s management has opted to use more debt than equity in financing its growth over the years. So, its ROE is very high, but its Debt/Equity ratio is also quite high, vs. industry averages.
Like BA, INTC has stronger than average ROA, ROE, and ROI figures, and also has a much better Operating Margin. Its Debt/Equity ratio is higher than industry averages, but not nearly as much as BA’s is.

All tables furnished by, unless otherwise noted.

Disclaimer: This article was written for informational purposes only, and is not intended as personal investment advice. Please practice due diligence before investing in any investment vehicle mentioned in this article.

Author owns no shares of BA or INTC at present time.
Copyright 2018 RH Group Inc. All Rights Reserved.

High Options Yields From A Blue Chip Mouse

Did you grow up watching Uncle Walt every Sunday night on the “wonderful World Of Disney”? Or maybe you had your own Mouseketeer hat?
These days, the Mouse hasn’t been getting much respect from Mr. Market, who has been acting like a house cat, with respect to Walt Disney co., (DIS), shares.

The problem is cord-cutting, and how it affects ESPN, one of Disney’s premier cable cash machines. As millennials opt out of bundled cable packages, ESPN has seen sales declines, and the price/share has struggled in the past year.
Click here to read more…

Defensive Utility Dividend Stocks Beating The Market In 2017

by Robert Hauver
Is the post-election rally over? Maybe it’s just slowing down, with some investors taking profits, and others adopting a “wait and see” posture, as we head toward next week’s Fed meeting, where it seems more than likely that they’ll raise rates again. There’s also the uncertainty of future policy execution in DC, coupled with the upcoming French and Dutch elections. Suddenly, there’s more for investors to worry about…
In light of this altered landscape, we examined the defensive Utility sector, also well known as having many dividend stocks. It’s represented here by the popular ETF, XLU, which serves as a proxy for the sector on many financial websites.
Even though the S&P has had an impressive gain of 5.69% over the past 3 months, the Utilities ETF has outperformed, rising 8.28%:

Here are XLU’s top 10 holdings – Florida-based Next Era Energy, NEE, is the fund’s largest holding, at 9.45%:

(Source: YahooFinance)
Valuations: This table ranks them by lowest P/E ratio, where electric utility PPL Corp., PPL, leads the pack by a wide margin. It’s interesting to note that PPL is also among the leaders for dividend yield – (see the Dividends table further on in this article for more info).

Performance: The first 4 stocks in this table have outperformed the group average and the S&P 500’s performance year to date in 2017, and also over the past trading month.

As the market has gotten a bit choppier, some Utilities have had more appeal, in spite of the impending advent of rising rates. Edison International, EIX, NEE, and Sempra Energy, SRE, are the 3 top performers in this group so far in 2017, and over the past month.

Dividends: However, those 3 leaders are among the lowest, when ranking by dividend yield. Of course, their yields declined, as their price/share advanced strongly over the past year, from 15% to over 20%.
Note: PPL’s next ex-dividend date is tomorrow, 3/8/17, so we should see it adjust downward for the $.395 quarterly dividend. PPL, NEE, SRE, and EIX have the lowest dividend payout ratios in this group, which speaks to the strength of their earnings, and their conservative cash allocation.

You can track the current prices and dividend yields for several of these stocks in the Utilities section of our High Dividend Stocks By Sectors Tables.

Options: We’ve listed this June call trade for NEE in our free Covered Call Table, which has more details about this and over 25 other call-selling trades. NEE has one $.983 quarterly dividend due during the term of this trade. The June $135.00 call strike has a bid of $2.00, about 2x the amount of the next dividend.

You can also track a June NEE put option trade, in our Cash Secured Puts Table, where we track over 25 other income-producing, put-selling trades.

Price Targets: As income and value investors, we’re always faced with the same conundrum – which do you favor more – dividend stocks with an attractive dividend yield, vs. finding undervalued stocks.
As this table illustrates, these stocks are all either close to or above their consensus price targets right now – analysts upward price revisions haven’t kept up with the price advances of this group. This makes sense, given that higher rates will create higher operating expenses for these capital equipment-heavy companies.

Financials: The relative debt loads for these companies shows that the 4 performance leaders, EIX, NEE, SRE, and PCG, all have Debt/Equity loads which are lower than the average for this group. Even if rates aren’t going to rise to much higher levels, the market is rewarding lower debt loads in this sector.

Disclosure: Author held no shares of any of the stocks mentioned in this article at the time of publishing.
Disclaimer: This article is written for informational purposes only, and isn’t intended as personal investment advice.
Copyright 2017 RH Group Inc. All Rights Reserved

How To Sell Covered Calls

by Robert Hauver
As we approach 2017, in this different market environment, we’ve received many requests recently for a detailed explanation of how to sell covered calls, so here goes:
Our Options & Investing Glossary has this brief definition: “An option strategy in which a call option is sold against an equivalent amount of long stock. Example: writing 2 XYZ May 60 calls while owning 200 shares or more of XYZ stock”.
Why are they known as covered calls? Because the call seller owns a corresponding amount of the underlying shares before selling any call options.

If you don’t own the underlying shares, you’d be selling naked calls, which is one of the most dangerous moves in the investing/trading world.  The old adage, “You’ll lose more than your dignity when you walk down Wall St. naked”, refers to the treacherous scenario of selling naked calls, in which your losses can be unlimited. As long as you own the corresponding amount of underlying shares 1st, you can “cover” your sold calls position.

Let’s dig deeper into the basics:
1. Many stocks have options available, with different monthly cycles, and some highly traded, large volume stocks also have weekly options. In general, the present month and the next month should always have options available. There are also usually other option months in the future, depending on which option cycle a stock is on.
The list of option months and expirations is called an option chain.
2. American options expire after the end of the 3rd Friday’s trading day, with their assignments taking place that weekend. (You’ll usually be able to see the final outcome of your option position by Monday, except on holiday weekends.)

3. One option contract corresponds to 100 shares of the underlying stock. An option’s strike price is the price at which an option seller is obligated to sell the underlying shares, if they are assigned. Conversely, an option buyer pays a premium to buy the shares at a specific strike price.

4. Assigned: When selling covered calls, if the underlying stock’s share price has risen beyond the value of the strike price of the option sold by the seller, his shares will usually be sold, (assigned), by his broker at the sold call’s strike price, usually at or near the expiration date.
Sometimes, your shares may be assigned just before an ex-dividend date, if the buyer wants to capture the dividend $. We’ll discuss a strategy for this scenario later in this article.

Trading Steps:
1. First and foremost, if you want to sell covered calls, you must own or buy at least 100 shares of the underlying stock. It’s also best to buy in 100-share quantities of the stock, so you have 100 shares covering each option contract that you sell.

2. Select an option month: In the example below for Cummings, CMI, we chose the February 2017 list of options from the pull-down menu on the left. The Bid = the $ amount per option that call buyers are currently bidding for this $140.00 Feb. 2017 option. The Ask = the $ amount per option that call sellers are currently trying to sell this option for. (The Mid is just an average of the Bid & Ask).

Volume = the amount of contracts which have changed hands today.
O.I – Open Interest – the total amount of contracts open for this specific CMI Feb. $140.00 call option:

3. Choose a strike price: We then chose the $140.00 call strike from the list of strike prices for CMI.
Why? Since CMI was trading at $138.06, we wanted to sell at a strike price near the money, (near CMI’s price), but above CMI’s price, so we have the potential for a price gain that’s larger than the dividends we’ll qualify for before the option expiration date.

4. Enter your sell order carefully: We then chose “Sell to Open” from the Action pull-down list on the right. We chose 1 contract for Quantity, “Limit” for order type, $4.70 for our limit price, and “Day” for our timing.

Note: If you want to make sure that your call sale goes through, you can sell at the Bid price. However, since some options have a much wider Bid/Ask price spread than this $4.70/$4.90 spread, you could try to sell for a higher-than-bid price.
Keep an eye on the Bid Size and the Ask Size – these refer to how many bidders and sellers there are for your option. If there are a lot more bidders, you may be able to sell for more than the current bid price.

In this example, we sold 1 CMI Feb. 2017 call option with a strike price of $140.00, which obligates us to sell 100 shares of CMI at $140.00/share, if our shares are assigned, (i.e., sold to a call buyer of that same option, who has exercised his option to buy 100 shares of CMI).
This $140 option expires after the market close on 2/17/2017. Call buyers are bidding $4.70 per option, which equals $470.00, since each option contract equals 100 shares of stock – (100 x $4.70=$470.00).


The next table details the income/profit for each of the 3 main scenarios you’d encounter for this trade. Note: Option profits are usually considered short term capital gains:
A. Static – If CMI doesn’t rise to or above $140.00 at or near the expiration date, your call options will expire worthless, leaving you with $573.00 income from the $1.03 dividend and the $4.70 option premium you received. You’ll also keep the underlying shares, since they didn’t get assigned.
B. Assigned before the ex-dividend date – If CMI rises to or above $140.00 near the ex-dividend date, your shares may get assigned, and you won’t receive the dividend. Always look at the potential price gain, (the difference between the option strike price and the underlying shares’ price), to see if you’ll be amply compensated for any loss of the dividend during the term of the trade.
In the CMI trade, the $140 strike price is $1.94 above CMI’s $138.06 price/share, vs. the $1.03 quarterly dividend you’d qualify for in February 2017.
C. Assigned after the ex-dividend date – If your shares get assigned after the ex-dividend date, you’d collect all 3 income/profit streams – the dividend, the option premium, and the assigned price gain. In this example, that’s quite unlikely, since CMI’s ex-dividend date may be on 2/17/17.


Our free Covered Calls Table gives you more details for this trade, and 25 other income-producing option trades.
Dividends: With its 2.97% dividend yield, CMI barely made it into the Industrials section of our High Dividend Stocks By Sectors Tables. They have a very impressive dividend growth rate of over 40%, and should go ex-dividend on 2/17/17, if they follow last year’s schedule.
Performance: CMI has had a very strong year in 2016, rising over 61% year-to-date. It has also outperformed the market over the past quarter.
Valuations: CMI looks a bit cheaper than broad industry averages on a P/E, Forward P/E, and a Price/Sales basis. However, it does command a higher Price/Book valuation.
Financials: CMI has stronger ROA, ROE, ROI, and Operating Margin figures than industry averages, and an average Debt/Equity load.

Disclaimer: This article was written for informational purposes only, and is not intended as personal investment advice. Please practice due diligence before investing in any investment vehicle mentioned in this article.
Disclosure: Author owned no shares of CMI at the time of this writing.
All tables furnished by, unless otherwise noted. Copyright 2016 DeMar Marketing. All Rights Reserved.

High Dividend Growth Stocks In 2015

by Robert Hauver
Looking for the sweet spot between dividend growth and dividend yield? We parsed the data from S&P 500 dividend stocks through April 30, 2015, to find out which dividend stocks have had strong dividend increases in 2015.
Sector-wise, Consumer Discretionary and Tech S&P 500 stocks had the best combination of overall performance and dividend increases. Even though Healthcare has been the leading sector for ages, it’s not known for having a lot of dividend paying stocks. In addition, this sector’s dividend increases haven’t kept pace with its rising share prices, which has also contributed to a lower overall dividend yield.
We found 3 prospects which had a good combination of dividend yield and dividend increases in 2015.
Click here to read more…

Copyright 2015 DeMar Marketing All Rights Reserved

3 Top Performing High Dividend Stocks In 2015

by Robert Hauver
Looking for high dividend stocks with market support in 2015? As always, we are too, and we were surprised where we found them – in the Energy sector. It was just weeks ago that this sector took a massive beating, with some energy dividend stocks losing up to 50% of their market value, as the price of crude oil collapsed.
However, it’s a new year and a new day for many Energy stocks – the ever-fickle market has decided that oil isn’t going to $10 a barrel, and that, maybe, some of these companies will survive after all, since they have viable business models.
Our High Dividend Stocks By Sector Tables, has been tracking these 3 high yielding stocks since early 2014. All 3 of them are LP’s, which had relatively recent IPO’s:
(You can find brief profiles for all 3 stocks at the bottom of this article.)
Click here to read more…

Copyright 2015 DeMar Marketing All rights reserved.

Homebuilder Dividend Stocks With Hidden High Yields

by Robert Hauver
With all of the recent market volatility and dividend cuts in Energy-related dividend stocks, income investors are looking to other sectors for income stability.
(We maintain High Dividend Stocks By Sectors Tables which feature many high yielding stocks for each sector.)

Although it’s not known for having any high dividend stocks, you may want to consider the Housing industry for some income plays and potential price appreciation.

We’ve found 3 homebuilder stocks which have been beating the S&P 500 over the past week, month and quarter. Two of these three stocks have also outperformed the market over the past year:

Strong Growth Ahead in Housing: Economists are predicting a big rise in household formations in 2015, a key figure for Housing. IHS predicts that 2015 will see the addition of 1.08 million new households, with economic growth driving up the rate of new formation. Single family housing production is expected to rise 26% in 2015. DHI and PHM both get a large part of their revenue from sales in warmer states, where home sales growth is expected to continue to outpace national growth, at a pace of 24%. TOL caters more to the upscale market, and has good exposure to the high end areas of New York City, and Washington, DC.

Dividends: PHM cut its quarterly dividend from 2009 through 2012, and reinstated in August 2013 at $.05. It maintained it at $.05 until December 2014, when it raised it by 60%, to $.08. TOL doesn’t pay a dividend yet, but, as you’ll see further below, it does have attractive options yields.
Covered Calls Options: You can greatly improve upon these quarterly dividends by selling options. These 3 trades all have call premiums which pay much more than PHM’s or DHI’s next quarterly dividends. In fact, the DHI call option pays over 15 times DHI’s next 2 quarterly dividend payouts.

Click here to read more…

Disclaimer: This article was written for informational purposes only. Author not responsible for any errors or omissions.
Disclosure: Author is short put options on DHI, PHM, and TOL.
Copyright: 2015 Demar Marketing All rights reserved

3 Healthcare High Dividend Stocks Beating The Market Pullback

by Robert Hauver
Looking for a safe place to hide during this latest market pullback? Healthcare was not only the leading sector in 2014- it has also led the market for most of 2015. Here’s a look at how the Healthcare sector has fared vs. the S&P 500, over the last 3 months, which just about coincides with the market highs of September 18, 2014. The Healthcare sector is up 3.81%, vs. a -1.44% loss for the S&P 500:
Digging further, we found 2 high dividend stocks within the Healthcare sector, which have both outperformed this sector and the market – HCP Inc., (HCP), (a Dividend Aristocrat), and Sabra Healthcare REIT, Inc., (SBRA).

Here’s a chart of these 2 dividend paying stocks over the same 3-month period, vs. the S&P 500. HCP is up nearly 10%, and SBRA is up nearly 7% during this period, vs. a -1.44% loss for the S&P 500:

Dividends: Our High Dividend Stocks By Sector Tables, lists both of these stocks, in the Healthcare section. In addition, we also follow a third related high yield stock- Sabra’s preferred stock issue, SBRAP, which currently yields nearly 7%, and has also beaten the market during this same 3-month period, having risen 3.08%.
Although HCP has a low 5-year dividend growth rate of 2.94%, it has increased its dividend per share for 29 consecutive years.

SBRA has raised its quarterly dividend from $.32 in 2011, to the current $.39 payout. Sabra amply covers its SBRAP preferred dividends by a factor of 3.22, i.e. its net income is 3.22 times its preferred dividend payout.
Preferred Long-Term Yield: The table below summarizes your net annualized yield for SBRAP, based upon 2 conditions:
1. You were to hold SBRAP until its 2018 liquidation date
2. Sabra redeems/buys back your SBRAP shares at the call date
Since SBRAP is trading at $1.08 above its $25.00 liquidation price, we subtracted this amount from the dividends that you’d collect between now and 3/21/18. You’d end up with a $4.71 net profit, which equals a 5.54% annualized yield:
Click here to read more…

Disclaimer: This article was written for informational purposes only. Author not responsible for any errors or omissions.
Copyright: 2014 Demar Marketing All rights reserved

3 High Yield Plays On Outperforming Energy High Dividend Stocks

by Robert Hauver
The Energy sector continues to lead all other sectors in 2014. As of 7/16/14, this sector, as measured by the XLE etf, was up 12.73% year to date, vs. 7.16% for the S&P500, and only 3.3% for the DOW. The XLE etf is dominated by large cap dividend stocks, such as Conoco Phillips, (COP), which is its 4th largest holding, after Exxon, Chevron, and Schlumberger.
When looking at performance, however, the majors, such as Exxon and Chevron, have greatly underperformed independent Conoco, which is up over 22% so far in 2014, vs. gains of only 5.2% for Chevron and 2.6% for Exxon.
COP also has the second highest dividend yield in the group, at 3.39%, having just raised its quarterly dividend from $.69 to $.73.
We screened for other dividend paying independent oil & gas stocks, to see if there are some other worthwhile outperformers in that sub-industry. We came up with Delek Logistics LP, (DKL), a relatively new, (NOV 2012 IPO),small cap high dividend stock, which we recently added to our High Dividend Stocks By Sectors Tables.

Dividends/Distributions: After spinning off its refining division, Phillips 66 (PSX), in 2012, COP has gone from paying $.66 to $.69, and now $.73 a quarter. DKL has raised its quarterly distribution 5 straight times since its IPO.

Options: Although COP just went ex-dividend, you can still earn an attractive options yield on it, via selling November 2014 covered calls, which will also allow you to either capture the next quarterly dividend, in October, or get paid even more $ if your shares get assigned. DKL has a much higher option yield, but its shares are much closer to its strike price.
Click here to learn more…

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.
Copyright DeMar Marketing 2014. All rights reserved.