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.
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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.
SCTRS-DIVYIELD-5-26-15
We found 3 prospects which had a good combination of dividend yield and dividend increases in 2015.
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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:
DKL-DLNG-IPO
(You can find brief profiles for all 3 stocks at the bottom of this article.)
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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:
PHM-DHI-PERF

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.

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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

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

The 5 Best Performing High Dividend Stocks In 2014

by Robert Hauver
We thought we’d take a different approach in this article, and look at high dividend stocks within the S&P 500 that are performing well in 2014, vs. those that are oversold and/or undervalued. Not surprisingly, 3 out of 5 of these top dividend stocks are from the Utilities and Healthcare sectors, which are the 2 top sectors year to date.
TOPDIVSTKS-PROFILE
Performance through 3/17/14: A Financial stock, AIV, is the top performer of this group so far in 2014, but, interestingly, made most of its gains in January and February, and is only up around 2% in March.
Garmin, (GRMN), a tech stock, has made all of its net gains over the past month.
The more defensive Utilities stocks, PEG and AEE, show a more balanced performance, both rising in January and February, in addition to the past trading month.
TOPDIVSTKS-PERF

Dividends: With its 4%-plus yield, we’ve added Public Enterprise Group, (PEG), to the Utilities section our High Dividend Stocks By Sector Tables. You’ll also find Lilly, (LLY), in the Healthcare section of the tables.
TOPDIVSTK-DIV

Options: 2 of these dividend paying stocks also have fairly high options yields – Garmin and Lilly. We’ve listed July Covered Call trades for both stocks below. Both stocks have ex-dividend dates for their next quarterly dividends, prior to the July call expiration, so you can effectively increase your overall yield substantially, via the combo of the dividend and option yields.
Garmin’s call option payout is nearly 5 times its dividend, and Lilly’s call option pays 4 times its dividend.
GRMN-LLY-CALLS
You can find more details on these and over 30 other trades in our free Covered Calls Table.
Both trades have call options which are enough above the stock’s share/price, to amply replace the dividend income, via price gains, if your shares get assigned prior to the ex-dividend date.
Here are the major income scenarios for the Garmin trade:
GRMN-CALLINC
Cash Secured Puts: Our Cash Secured Puts Table also lists July put trades for Garmin and Lilly, (along with over 30 other trades). These put option trades both have strike prices which are below these stocks’ current price/share, thereby achieving a lower breakeven:
TOPDIVSTK-PUT
Financials:
TOPDIVSTK-ROE
Valuations:
TOPDIV-PB

Disclosure: Author held no positions as of yet in any of the stocks mentioned in this article 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.

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.

An Oversold, Undervalued Blue Chip Dividend Stock With High Options Yields

by Robert Hauver

This article will focus on the “Rodney Dangerfield” of drilling dividend stocks, UK-based Ensco plc, (ticker ESV), which has had big dividend and earnings growth, and looks poised to continue that trend. Unfortunately for its shareholders, the market has given ESV little respect over the past year, sending it down to an oversold price/share currently:
ESV1-CHART
ESV1-PERF

Undervalued Earnings: ESV has concentrated on modernizing its fleet, and has one of the youngest fleets in the drilling industry, with 9 new rigs delivered over the past 3 years, and 8 more to be delivered through 2015. This has helped it achieve higher margins than its competitors, and has also contributed to strong growth over the trailing 4 quarters:
EVS1-QTRLY

Analysts are estimating continued EPS growth in 2014, which, combined with ESV’s low P/E, show it to be undervalued on a PEG basis:
ESV1-PEG
Looking further into the future, ESV also has a low 5-year forward PEG ratio of .60:
ESV1-EPS5YR
More Valuations: ESV also looks undervalued vs. its industry on a Price/Sales and a Price/Book basis:
ESV1-PB
Strong Dividend Growth: ESV has raised its quarterly dividend all the way from $.025 in 2008, to $.50 in 2013.
ESV1-DIV
Options: Although ESV isn’t in the universe of high dividend stocks, it does have high options yields. You can substantially increase your yield on ESV’s dividends, via selling Covered Calls.
This March 2014 trade, from our Covered Calls Table, has a $55.00 strike price. The call premium pays 3 times what ESV’s next 2 dividends pay. You’ll also get paid this covered call premium now, vs. having to wait for ESV’s next 2 dividends to be paid out:
ESV1-CALL
We’ve listed the 3 major scenarios below for this call options trade:
ESV1-CALLINC
Puts: If you want to achieve a lower breakeven cost now, selling Cash Secured Puts is the way to go. This put options trade also expires in March 2014, and pays en even higher options premium, of $3.90, while giving you a breakeven of $51.10, which is just above ESV’s 52-week low. You can see more details for this and over 30 other Put options trades, in our Cash Secured Puts Table:
ESV1-PUT
Financials: As we mentioned above, ESV enjoys much higher margins than its industry averages. It carries a bit more debt, but it does have an Interest Coverage ratio of 11.52.
ESV1-ROE
Author: Robert Hauver, copyright 2013 DeMar Marketing, All Rights Reserved.
Disclosure: Author had no ESV stock or options positions yet at the time of this writing, but may initiate positions over the next 72 hours.
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.

2 High Yield Covered Calls Trades

by Robert Hauver

Looking for quick income from your trading? There are 2 trades sitting near the top of our Covered Calls Table, which offer annualized yields of well over 25%. These aren’t high dividend paying stocks, but, rather, they’re dividend stocks with high options yields.

These 2 stocks couldn’t be more dissimilar. One is a U.S. homebuilder, and the other is a U.S.-based, multinational tech giant:

MDC Holdings (MDC): MDC’s homebuilding business activities include the purchase of finished lots or development of lots for the construction and sale of single-family detached homes to first-time and first-time move-up homebuyers under the Richmond American Homes name. The company’s financial services business activities comprise the origination of mortgage loans primarily for homebuyers; provision of third-party insurance products to homebuyers; and title agency services to homebuyers in Colorado, Florida, Maryland, Nevada, and Virginia. It also provides insurance coverage on homes sold and for work performed in completed subdivisions; and re-insures the claims. M.D.C. Holdings, Inc. was founded in 1972 and is based in Denver, Colorado.

Cisco Systems (CSCO): Cisco designs, manufactures, and sells Internet protocol (IP) based networking and other products related to the communications and information technology industries worldwide. It offers switching products, including fixed-configuration and modular switches, and storage products that provide connectivity to end users, workstations, IP phones, access points, and servers, as well as function as aggregators on local-area networks and wide-area networks; and routers that interconnects public and private IP networks for mobile, data, voice, and video applications.

Dividends: MDC, which pays a $.25 quarterly dividend, paid out its first 3 2013 dividends in December 2012, to help its shareholders avoid higher dividend tax rates in 2013. Not to worry, however, since you can recapture this amount and more, via selling covered calls. (See below)

CSCO made a hefty raise to its quarterly dividend in late 2012, upping it by over 21%, to $.17, from $.14. CSCO also goes ex-dividend on 7/1/13.

Options: MDC currently has an out-of-the-money September $37.00 put which pays $2.65, which equals 7.25%, or 28.46% annualized for this approx. 3-month trade. If MDC moves to $37.00 or higher, your MDC shares will get assigned, resulting in an additional $.46/share gain, for a total potential annualized assigned yield of over 33%.

(You can see more details on this and over 35 other call option trades in our free Covered Calls Table.)

CSCO has a shorter call expiration, a July $25.00 call option, which pays $0.46, offering you a 27.57% annualized yield. This call is also above CSCO’s share price, so if CSCO rises to $25.00 or above, you’ll receive an additional $.18/share.

MDC-CSCO-CALLS

There are also attractive put options selling opportunities for MDC, which you can learn more about, in our free Cash Secured Puts Table.

Author: Robert Hauver, copyright 2013 DeMar Marketing, All Rights Reserved.
Disclosure: Author was short MDC put options, and long CSCO shares 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.

How To Sell Cash Secured Puts

by Robert Hauver

There’s a low-profile, conservative trading technique that we often utilize to “get paid to wait”, for stocks that we want to take a position in.
Have you ever wanted to buy a stock, but its current price seems too high, or the market may have gotten ahead of itself? Instead of just buying this stock, consider selling put options for it.
As it turns out, the put option premiums that you can receive can often be higher than a stock’s next few dividends, even on high dividend stocks.
Here are some important principles and definitions to remember when selling options:
1. One option contract = 100 shares of the underlying stock.
2. The further out in time that you sell an option, the more money, (higher premium), you’ll get paid. Why? Because options have time value, i.e. “time is money”
3. Put option sellers don’t receive dividends. We list dividends in out our Cash Secured Puts Table so you can compare them to the put premiums.
4. Strike Price: The price you’re agreeing to buy the stock for, up until the expiration date, in return for being paid a Put Premium now.
5. Bid: The price that Put or Call buyers are willing to pay.
6. Ask: The price that Put or Call sellers are willing to sell at.
7. Many brokerage sites also list the Bid and Ask quantities, which is helpful – if there are many more bidders than sellers, you may have a chance of selling your put or call options at a higher price/premium than the current bid.
8. Volume/Open Interest: Volume is amount of contracts which have changed hands today. Open Interest is the amount of contracts which haven’t yet expired for each call or put option. Thinly traded options have lower Open Interest.
9. Cash Reserve: This equals the amount of $ that your broker will hold in your account, to ensure that you have enough funds to buy the underlying shares. This amount varies from approx. 25% up to 100%, depending on the type of account- IRA’s will need a 100% cash reserve, whereas taxable accounts approved for Option Level 3 may have only 25-35% held as cash reserve per put selling trade.

TRADING EXAMPLE: To illustrate how to sell cash secured puts, let’s look at MDC, which has high options yields, and was trading at $38.91 at the time of this writing.
1. Go to the option chain for MDC, and select/find “Puts”. (Many brokers’ sites let you select puts OR calls, which makes the data less confusing.)
For each option you’ll see the Strike Price, the Last or most recent price, the Bid prices and quantities, the Ask prices and quantities, today’s Volume, and the current Open Interest (OI).
2. Look up the values for the closest months, (there’s usually a pulldown menu), to see if there are any good yields on Put strike prices below MDC’s current price. Even though there are June and July expirations, we chose the September expiration, further out in time, since it gives you a bigger put premium, (payout), which, in turn, lowers your breakeven.
MDC-PUT-5-28-2013

3. Compare the Bids for the Strike Prices that are below the stock’s price. If you want to be more conservative, choose a lower strike price, for a lower breakeven. If you want to be more aggressive, choose a high strike price, which will pay you more, but give you a higher breakeven.

4. Compare the breakevens to the stock’s 52-week low and high, to give you an idea of its range. You can find this data on the far right side of our Cash Secured Puts Table.
MDC-PutTable
5. We chose the September $38.00 put in our example. It pays $2.70, which gives you a $35.30 breakeven. Since the Bid Quantity (BidQ) is 204, and Ask Quantity (AskQ) is only 97, there’s a good chance that you may be able to sell the $28.00 put for more than $2.70.

6. Compare the upcoming dividends between now and the expiration date: Is the put bid price higher than these dividends? In some cases, it’s much higher. In our example, the Put Bid Premium is nearly 10 times MDC’s next dividend payout.

7. Look at the Put Options Yield: Our table lists all put yields as annualized because there are many different expiration dates. In this example, the Sept. $38.00 put option pays $2.70, which is a 7.1% nominal yield, for a 116-day term, which equals 22.95% annualized.

8. Cash Reserve: For each contract that you sell, your broker will reserve/hold in your account the $ needed to buy 100 shares of the underlying stock. In our example, we sold one $38.00 put, which equals $3,800.00 Cash Reserve (100 x $38.00 MDC share price).

9. Placing the Trade: Click the “Trade” link for the put option you want to sell. This should take you to a Trading module.
>1. Choose “Sell to Open” in the Action pulldown menu.
>2. Choose “Limit” in the Order Type menu.
>3. Enter your desired Selling Price in the Limit Price field.
>4. Select “Day” in the TIF pulldown menu
MDC-STO
When you’ve made all of these entries, click the “Verify Order” button. This will bring up a summary of your order which will list the Expiration Date, the Put Strike Price, and your selling price.

Yikes! What have I gotten myself into?! In our example, we sold one September 2013 $38.00 put for MDC, which obligates us to buy 100 shares of MDC at $38.00, up until this put option’s Sept. 21, 2013 expiration date. BUT, our real cost is only $35.30, because we got paid $2.70/share, ($270.00/contract sold), for selling the put option.

After selling 1 put, you’ll receive $270.00 into your account (upon settlement in 3 days or less) for the contract you sold: (1 put corresponds to 100 shares of stock, 100 x $2.70 put premium = $270.00).

You’d have 1 of 2 outcomes at or near the expiration in September (usually options aren’t exercised or assigned until right around their expiration date):

1. Assignment: If MDC declines below $38.00, you’d be assigned (sold) 100 shares of MDC for every put contract you sold.
2. Non-Assignment: If MDC doesn’t decline to approximately $38.00 or less, your cash reserve money gets released, and you’ve made $270.00 for every contract you sold, less commissions.

In scenario 1, you’d end up owning MDC at a cost basis of $35.30, which is 10.23% lower than its current $38.91 price. There are two ways to view this outcome: Some traders would say that if you’d just waited and done nothing, you would have been able to buy it for $35.30 or even less, anyway, if the market went down.
However, you wouldn’t have had the profit opportunity that selling the put gave you, had you just waited for a market downturn. In addition, you received the put cash immediately, which you can put to use now, AND you’ve determined your potential buy price at $35.30.

Timing: Since selling puts is a conservative bullish strategy, it’s best to sell them after prices have fallen, since put prices move inversely to the market. Look for a “down” day or week when the stock is falling in price – this downward action will inflate the put premiums you can sell for, and lower your breakeven.

Need more info? You can also find more definitions in our Options Glossary page.

Author – Robert Hauver, copyright 2013 DeMar Marketing, All Rights Reserved.
Disclosure: Author was short MDC 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.