VF Corp, A Dividend Stock WIth A 20% Option Yield

By Robert Hauver

VF Corp., (VFC), has been one of the best stocks to buy this year for price gains, having outperformed the market thus far in 2012, and is only 9.06% off of its 52-week highs.VFC is among the top 20 Consumer Goods dividend stocks for 2012 performance.

VFC is a $9 billion apparel and footwear powerhouse, with a very diverse, international portfolio of brands and products, including such well known brands as Lee, Nautica, Wrangler, North Face, and Timberland.

VFC-BETA

With its 2.06% dividend yield, VFC isn’t really part of the high dividend stocks universe, but you can vastly improve upon its dividends by selling covered calls or cash secured puts.

Here’s a covered call trade for VFC, that’s listed in our Covered Call Table, along with over 30 other trades with high options yields.  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 2 Dividend Aristocrats Have The Best Earnings Growth

By Robert Hauver

Are you searching for dividend paying stocks you can depend on?  The Dividend Aristocrats is an elite group of dividend stocks, created by Standard & Poors, whose members have increased their dividends for at least the last 25 consecutive years.  In fact, some of them have done so for many more years than that.  This group lost a few members during the economic downturn, so it’s quite a testament to the earnings power and management of those stocks that not only survived the crisis, but also managed to increase their dividend payouts during it.

We looked for stocks within this group who had consistent earnings growth, good mgt. metrics, and valuations that haven’t gone sky high, via the rally of the last few months, and we found these 2 impressive companies from 2 different sectors and industries, Nucor Steel, and VF Corp:

NUE-VFC-SECTOR

(We listed Company profiles at the bottom of this article.)

Earnings & Valuations: These are 2 of the very few Dividend Aristocrats stocks which achieved strong growth not only in their most recent fiscal year, but also impressive quarter-over-quarter earnings and sales growth, AND, have strong growth forecasts for their next fiscal year. NUE looks undervalued vs. its Steel & Iron industry peers, on a PEG, P/E, and Price/Sales basis, but is pricier on a Price/Book basis.

VFC’s earnings industry comps also look superior. Their projected Next Fiscal Year EPS growth is lower than the industry avg., since the industry is bouncing back from very poor growth in the most recent fiscal year and most recent quarter.  Having gained over 26% in the past 6 months, VFC’s share price gains have pushed its valuations higher as well, particularly Price/Sales:

NUE-VFC-PEG

Dividends: With its above-avg. dividend, NUE is listed in the Industrials section of our High Dividend Stocks By Sectors Tables.  Both of these stocks have upcoming March ex-dividend dates:

NUE-VFC-DIVS

Covered Calls: If you want to increase your yields over the short term, selling covered call options can offer you some lucrative additional income. In addition to often paying you fat premiums, selling options is a way to generate quick income from stocks that you own or wish to buy. Both of these 2 covered call trades feature high options yields, and have strike prices that are higher than their respective stocks’ current share prices. The higher strike price gives you the possibility of potential price gain profits, in addition to your dividend and call option income. If you’re more bullish about a stock, you may want to sell covered calls at a higher strike price – the difference between the strike price and the stock’s cost equals your potential price gain, or assigned yield.

These two 3-5 month trades have call options that outpay the dividends by up to 6 times.

(You can find more details for these and over 30 other trades in our Covered Calls Table.)

NUE-VFC-CALLS

Performance & Technical Data: Both NUE and VFC have been among the best stocks to buy for price gains over the past few months, but NUE is still down for the past year:

NUE-VFC-PERF

Cash Secured Puts: Since these stocks are near their 52-week highs, you may want to consider another strategy, selling cash secured puts, in order to achieve a lower break-even.  The VFC  $145 put option is below VFC’s current price, and gives you a break-even of approx. 6% below VFC’s price.  The put options pay out up to over 8 times more than the dividends do over this short term.

If you want to be even more conservative, and get a lower break-even price, you can sell cash secured put options at a strike price even further below the stock price, which won’t pay you as much of a put premium, unless you sell them further out in time. Generally, the further out in time you sell an option, the higher premium/payout you’ll receive.

(You can see more details on these and over 30 other high yield Cash Secured Puts trades in our Cash Secured Puts Table.)

NUE-VFC-PUTS

Financials:  Not much to complain about with these financial figures, excepting Nucor’s lower operating margin, which is probably due to them using scrap metal as their feedstock:

NUE-VFC-ROE

Company Profiles:

Nucor:: Established in 1940, Nucor is the largest steel producer in the US, and is the largest recycler of scrap steel in the world. Nucor produces many steel products, such as structural steel, sheet steel, plate steel, cold finished steel, and wire mesh, and also acts as a raw materials broker in the steel industry. (Source: Nucor Corp. website)

VF Corp: At $9 billion in sales, VF is the world’s largest apparel company. VF owns many famous apparel and footwear brands, such as Lee, Nautica, Wrangler, Eagle Creek, and others. VF’s lifestyle businesses – Outdoor & Action Sports, Sportswear and Contemporary Brands – are targeted to be more than 60% of total revenues by 2015. VFC is aiming to add $5 billion in organic revenue growth and $5 in earnings per share over the next five years from 2010 levels. Strong growth in our highly profitable international and direct-to-consumer businesses is expected to fuel an expansion in operating margins to 15%. Over the next five years, VFC’s goal is to grow its international revenues by 15% annually to comprise 40% of total revenues. VFC also expects 15% growth in its direct-to-consumer businesses, which should account for about 22% of revenues by 2015. (Source: VFC website)

Disclosure:  Author has no positions in NUE and VFC as of yet, but has definitely worn Wrangler and Lee jeans sometime in the distant past…

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

4 Dividend Aristocrats That Beat The Market Correction

By Robert Hauver

The S&P sank -17.27% from July 7th to its August 8th, causing many portfolio losses. Where can you find some solid dividend stocks to help you through the next market pullback? Try the Dividend Aristocrats – an elite group of dividend stocks that have raised their dividends for at least 25 consecutive years. Four members of the Dividend Aristocrats actually declined less than the S&P, rebounded more, AND are higher than their July 7th marks. Here’s how these four dividend paying stocks performed during and after the market correction:
ED-KO-MCD-HI-LOW
Three of these iconic firms offer basic items: famous brand versions of junk food, soda pop/bottled water, and apparel. Con Ed is the major diversified utility in the metro NY area.

Dividends:
Con Ed is listed in the Utilities section of our High Dividend Stocks By Sector Tables.
ED-KO-MCD-DIVS

Financials:
Although McDonalds and Coca-Cola have very strong mgt. metrics and good margins, further research will show that all 4 firms have lower ROE’s and higher ROI’s than their respective industry avgs. Relatively speaking, however, their reps as safe haven stocks renders them more attractive than their peers during a downturn.

ED-KO-MCD-ROE

Valuations: KO has superior EPS growth stats in the table below, and is the most undervalued on a PEG basis. Of course, utility stocks, such as Con Ed, aren’t known for having great growth figures, due to the heavily regulated environment in which they operate.
ED-KO-MCD-PEG

Two strategies that will bolster the defensive strength of these stocks are selling covered calls and cash secured puts.

VFC has the highest options yields of these 4 stocks, and we’ve listed it in our Covered Calls and Cash Secured Puts Tables, along with many other option selling trades.
The call and put premiums for VFC’s Feb. 2012 options are over 8 times the dividend amount during this 6-month term.

Covered Calls:

ED-VFC-CALLS

Cash Secured Puts:
ED-VFC-puts

Disclosure: No positions at this time.

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

© 2011 DeMar Marketing. All Rights Reserved.