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 DoubleDividendStocks.com 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.

Options:
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.

Performance:
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.

Financials:
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 DoubleDividendStocks.com, 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.

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

Stock Market News: 4/14/18

Markets: It was an up week for the market, with all 4 indexes posting strong gains, as the market turned in its best performance in a month. Trade war fears ebbed, but investors were unimpressed on Friday by good major bank earnings reports, sending the market down in late trading. Even though JPM, C, and WFC beat earnings estimates, investors were expecting more, due to the anticipated benefits from the tax cut bill. These 3 banks fell from -1.5% to 3.4% on Friday.

Click here to read more…

2017 Healthcare Update: 2 Healthcare Dividend Stocks With Low Debt

by Robert Hauver
Looking at Sector performance for 2017, it appears that Healthcare has regained some of its luster – it’s the 2nd leading sector, behind Tech, and is up nearly 8% in 2017:

Even though there’s a lot of uncertainty in the US revolving around the future of the Affordable Care Act, the bottom line is that America, like most industrialized nations, is aging rapidly. You’ve probably heard that attention-grabbing statistic – “10,000 Americans are turning 65 every day”. That certainly means that we’ll be needing more, not less, healthcare in coming years, regardless of what happens in DC.
With this in mind, we searched for some healthcare dividend stocks with steady payouts, good dividend coverage, an attractive dividend yield, and, to keep the rate hike fears at bay, low debt.
We came up with 2 companies, both of which are micro cap stocks, in the $50M – $300M range, in the Medical Equipment sub-industry: 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

This Week’s Top 5 Performing Dividend Stocks

by Robert Hauver
With all of the recent market turmoil, we thought we’d take a look at which dividend stocks performed the best this past week. While these aren’t high dividend stocks, we screened for stocks with a dividend yield above 3%, and a moderate dividend payout ratio.

Not surprisingly, these top 5 dividend stocks are from 2 well-known defensive sectors – Utilities and Consumer Staples, which are also the 2 best performing sectors of the past month.

Performance: These stocks have all outperformed the market this week, and over the past trading month, vs. a -1.36% weekly decline and a -2.07% monthly decline for the S&P 500. One of the big reasons for their strong support by the market right now is that they all have low beta’s, which signifies a low correlation to market volatility.

Click here to read more…

These Undervalued Refining Dividend Stocks Have High Options Yields And More Room To Run

by Robert Hauver
As the price of crude oil has fallen this year, most energy-related stocks have gotten hammered…except for some refining stocks. Why? Because lower crude prices mean lower feedstock costs for refiners, and actually pump up refiners’ profit margins. This fact has not gone unnoticed by the market, which has favored some refiners over other energy-related stocks in recent weeks.
This article covers 2 dividend stocks which are beneficiaries of this turn in fortunes – Marathon Petroleum, (MPC), and Phillips 66, (PSX). While these aren’t high dividend stocks, they do have high options yields, which we’ll cover later on in the article.
MPC has done much better than PSX in all of the following time periods:
MPC-PSX-PERF

However, PSX’s fortunes may be about to change – Goldman Sachs analyst Neil Mehta just added PSX and MPC to his recommended Buy list on 11/18/14, and PSX is up over 3.7% over the last week.
Profiles:
MPC is engaged in refining, transporting, and marketing petroleum products primarily in the US. It operates through 3 segments: Refining & Marketing, Speedway, and Pipeline Transportation.
MPC refines crude oil and other feed stocks at its 7 refineries in the Gulf Coast and Midwest regions of the US; and purchases ethanol and refined products for resale. Its refined products include gasoline, distillates, propane, feed stocks and special products, heavy fuel oil, and asphalt.
MPC also sells transportation fuels and convenience products in the retail market through Speedway convenience stores, and transports crude oil and other feedstocks to its refineries and other locations.
MPC markets its refined products to resellers, consumers, independent retailers, wholesale customers, marathon-branded jobbers, its Speedway convenience stores, airlines, transportation companies, and utility companies, as well as exports its refined products.
As of2/4/14, MPC owned, leased, and had ownership interests in approximately 8,300 miles of pipeline, as well as owned and operated 1,480 convenience stores in 9 states of the United States; and operated 5,200 independently owned retail outlets in the 18 states of the United States.

PSX – PSX Phillips 66 operates as an energy manufacturing and logistics company, operating in 4 segments: Midstream, Chemicals, Refining, Marketing and Specialties.
Refining buys, sells, and refines crude oil and other feedstocks into petroleum products, such as gasolines, distillates, and aviation fuels in the United States, Europe, and Asia.
Marketing and Specialties purchases for resale and markets refined petroleum products comprising gasolines, distillates, and aviation fuels in the United States and Europe. This segment manufactures and sells specialty products, such as petroleum coke, waxes, solvents, and polypropylene.
Midstream transports crude oil and other feedstocks to its refineries and other locations, as well as delivers refined and specialty products, also gathers, processes, transports, and markets natural gas; and transports, fractionates, and markets natural gas liquids in the United States.
Chemicals produces and markets ethylene, propylene, and other olefin products. It also manufactures and markets aromatics products, such as benzene, styrene, paraxylene, and cyclohexane, as well as polystyrene and styrene-butadiene copolymers.

Dividends: 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 Basic Materials Dividend Stocks Trouncing The Market

By Robert Hauver

Basic Materials had been getting pummeled in 2012, for a number of reasons, chiefly the slowdown in the world economy, particularly China, and a strong dollar. This sector is the worst performing sector so far, down 0.6% in 2012:

However, over the past month, this sector has outperformed all others, thanks to a falling dollar, and renewed stimulus from the Chinese government.  Click here to read more…

Halliburton – An Undervalued Blue Chip Dividend Stock

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.

Author: Robert Hauver © 2012 Demar Marketing All Rights Reserved

These Dow Dividend Stocks Are Bucking The April Pullback

By Robert Hauver

It’s been a rainy April for the market thus far, with the S&P down almost -3.00% through 4/19/12. Being  optimistic, we went searching for dividend paying stocks that are bucking the new market pullback.  We found 2 contenders, Caterpillar, (CAT), and Home Depot, (HD), that have held their own in this month’s market decline, and have also done well in recent rallies:

CAT-HD-PERF

HD beat CAT in the Nov. 2011 pullback, and has also had stronger share performance year to date and during this month’s decline.

Valuations & Earnings Growth: CAT derives a lot of its profits from overseas, vs. Home Depot’s mostly domestic focus on the US home market. Subsequently, CAT has had stronger earnings growth in its most recent quarter and fiscal year, as the hobbled US consumer slowly picks up spending, and the home market remains weak. Although it’s up over 18% this year, CAT still looks more undervalued on a PEG basis than HD.

CAT-HD-PEG

We’ll find out if CAT’s current EPS projections hold, when it reports earnings, on its upcoming April 25th morning conference call next week. (Judging by how far off analysts have been in their CAT estimates in recent quarters, it should be an interesting report.)

CAT-ANLYSTMISSES

Dividends: Although CAT and HD aren’t high dividend stocks, both firms have a 5-year dividend growth rate that’s above their industry avgs.: CAT’s is 9.62%, and HD’s is 9.03%. CAT’s dividend payout ratio is more conservative than its industry avgs., while HD’s is much higher than its industry’s low avg. of 26.4%:

CAT-HD-DIVS

Covered Calls: Combining covered call options with dividend stocks is a powerful way to create much more immediate income than many stocks’ dividends offer over 1 – 3 quarters.  The increase in income is particularly high in a stock like CAT, which has high options yields that dwarf its dividend yield.  The tradeoff is that you may forgo potential future price gains, in return for being paid a call option premium now.  CAT has a higher beta and more volatility than HD, which gives it higher options yields.

In this trade, CAT’s August $110.00 call options pay well over 12 times its $.46 quarterly dividend.

CAT-HD-CALLS

If CAT is above $110.00 at or near expiration in August, your shares will be sold/assigned for $110.00, no matter how much higher CAT rises.  You’ll receive an additional $2.64/share in price gain, for an additional assigned yield of 7.54% annualized, and the total potential assigned yield is 25.86%. ($110.00 strike price – $107.36 stock cost = $2.64/share.)

How does this compare to just buying CAT outright at $107.36? Since you received a call premium of $5.95, at a strike price of $110.00, your maximum price point potential is $115.95.  If CAT doesn’t go as high as $115.95 during this 4-month term, you’d be ahead by selling this covered call.

(Each option contract corresponds to 100 shares of the underlying stock.)

The 3 income streams in this covered call trade are, (for 1oo shares of stock bought and 1 call option sold):

1. Call premium of $5.95/share, (paid within 3 days of the trade): $595.00

2. Quarterly dividend of $.46/share, (paid in August, ex-dividend date in July): $46.00

3. Potential assigned price gain of $2.64/share, if CAT is above $110.00 at or near expiration: $264.00

(You can see more details for over 30 other high options yields trades in our Covered Calls Table.)

Technical Data: CAT and HD have been two of the best stocks to buy for price gains over the past year:

CAT-HD-TECH

As the table above shows, both of these stocks are quite close to their 52-week highs, which leads us to another, more conservative options strategy – selling puts.

Cash Secured Puts: By selling cash secured puts below a stock’s current price, you’ll achieve a lower break-even price, and also get paid within 3 days of making the put sale. However, you won’t qualify for any dividends, but, as you can see, the put options listed below pay out over 6 to 14 times what these quarterly dividends pay.

For every put option that you sell, your broker will secure enough cash in your account to purchase 100 shares of the underlyng stock, at whatever the put option’s strike price is, hence the name “cash secured puts”. In the CAT put option trade below, the broker would hold $10,500.00, (100 times the $105.00 strike price).

There are more details on these and over 30 other high yield Cash Secured Puts trades in our Cash Secured Puts Table.)

CAT-HD-PUTS

Financials: Both firms’ metrics are far above their industry avgs, except for CAT’s higher debt load. However, CAT has an interest coverage ratio of 6.4.

CAT-HD-ROE

Disclosure: Author is short Caterpillar put options.

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

Author: Robert Hauver © 2012 Demar Marketing All Rights Reserved