by Robert Hauver
Dow dividend stock IBM, (IBM), is going ex-dividend next week, on 5/8/13:
IBM dipped below $200.00 again today, 5/1/13, which sets up a high yield, short-term covered call trade:
There are 3 potential income scenarios to this 2-week trade, all of which pay you at least a $2.08/share call option premium:
1. Static – IBM’s share price isn’t above $200.00 at or near expiration, and your IBM shares don’t get assigned/sold. You receive the $2.08 call premium and the $.95 dividend.
2. Assigned before the ex-dividend date- IBM’s share price is above $200.00 before 5/8/13, and your IBM shares get assigned/sold. You receive the $2.08 call option premium, and the price gain of $.37, but not the $.95/share dividend.
3. Assigned after the ex-dividend date- IBM is above $200.00 after 5/8/13, and your IBM shares get assigned/sold on or near the 5/17/13 expiration date. You’d receive the $2.08 call option premium, the $.95/share dividend, and the price gain of $.37:
You can see more details for this and over 35 other high yield options trades in our free Covered Calls Table.
Cash Secured Puts: We also list a short term put-selling trade for IBM which offers a 13.5% annualized yield, in our free Cash Secured Puts Table.
Earnings: IBM got beaten up after its most recent quarterly earnings report disappointed – revenue fell 5%, and diluted normalized EPS fell 7.2%. However, the 15% earnings estimates for 2013 are still strong enough to give it an undervalued 2013 PEG ratio:
Financials: Although it has more debt, IBM’s Mgt. Efficiency ratios are very superior to its peer industry’s averages. This cash cow also has an Interest Coverage ratio of over 35., and also has a 5-year Dividend Growth Rate of over 17%.
Other Valuations: Like many Dow dividend stocks, IBM commands a premium Price/Book value vs.its peers:
Disclaimer: This article was written for informational purposes only and is not intended as investment advice.
Disclosure: The author was short IBM put options at the time of this writing.
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…
Standard Motor Parts, (SMP), had been beaten up after its disappointing 2nd quarter earnings release on May 3rd, but the market has gotten much more revved up about this Industrial dividend stock this summer. SMP received an analyst upgrade in early June, which certainly helped its share price:
Maybe this is why – even after its recent price gains, SMP still looks very undervalued on PEG basis.
Looking for dividend paying stocks with growth at a reasonable price? The Walt Disney Co., (DIS), which is in the fast-growing Diversified Media industry, has bettered its peers in 2012 for share performance. However, Disney still looks undervalued, on a PEG basis, due to its growth prospects:
Disney is currently cashing in big-time on the huge hit, “The Avengers”, which has grossed $1.18 billion so far in global ticket sales, making it Disney’s biggest grossing movie of all time, even higher than any of its successful “Pirates Of The Caribbean” films – sorry pirates… One of Disney’s major ongoing strengths is its ESPN cable franchise, which is the highest paid cable network around, netting over 4 times what other cable channels get paid. Click here to learn more…
Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.
Looking for defensive dividend paying stocks? It makes sense – May is turning out to be one of the worst months in quite some time, with the S&P 500 down over 6%, the DOW down nearly 6%, and the NASDAQ and RUSSELL 2000 Small Caps both down over 7%.
Here are two dividend stocks from our High Dividend Stocks By Sector Tables that have outperformed the market since the start of the spring pullback in April. United-Guardian, (UG), is a NY-based microcap, and Wisconsin Energy, (WEC), is a large cap electric utility:
Performance: Both UG and WEC have beaten the market quite handily in these time periods…
But things get really interesting, when you look at their performance during rallies and pullbacks over the past 11 months.
The S&P 500 has pulled back approx. 4% since its early April highs, which begs the question, are there any dividend paying stocks that have beaten the market since then? We took 3 dividend stocks from our High Dividend Stocks By Sector tables, and researched how they’ve done in all of the various rallies and pullbacks since last summer.
These 3 stocks have all held up better than the market in pullbacks, and have also participated in rallies. Not surprisingly, these defensive dividend stocks hail from the Healthcare and Utilities sectors: NextEra Energy, (NEE), Xcel Energy, (XEL), and Eli Lilly Co., (LLY):