Two Industrial Dividend Stocks With 30% Covered Call Yields

Standard Motor Products, (SMP), and Worthington Industries, (WOR), are both on a roll this summer, having rallied significantly since the June 4th lows:

Dividends: SMP goes ex-dividend next week, and WOR goes ex- in early September:

Covered Calls:  As you may have noticed on the 2 charts above, both SMP and WOR are currently showing as being overbought on their respective stochastic charts.  This overbought condition often offers the best covered call option yields, and also helps to lock in some of your profits. Both of these dividend stocks currently have very high options yields for their covered calls.

Here are are 2 trades from our Covered Calls Table:

Even though SMP and WOR aren’t high dividend stocks, their options pay out over 6 times their dividend amounts in these 2 trades.  The WOR covered call is in the money, with a strike price that’s slightly lower than SMP’s $22.53 price per share.  The SMP price is above SMP’s price per share, and thus offers an potential assigned yield of 7.64%, ($.34/share difference between the $17.50 strike price, and SMP’s $17.16 share price.)  The SMP is a longer term trade, expiring on November, hence its lower annualized yield:

Disclosure:  Author had no positions in any of the stocks mentioned in this article at the time of this writing.

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

Worthington Industries Is On A Roll

by Robert Hauver

Looking for dividend stocks with market support?

Steel and Metal processor Worthington Industries, (WOR), has been on a roll since the June 4th lows, rising over 42%, vs. the S&P, which has gained approx. 6%. This dividend stock has done better than the Steel & Iron industry, which is up approx. 4% since June 4th, but is still down 9% for the year, vs. WOR’s big 36.72% gain:

Earnings Growth: A big part of the attraction for WOR stems from its EPS growth figures, which show it to still be undervalued on a PEG basis for next year’s earnings:  Click here to read more…
 

Disclosure:  Author had no positions in WOR at the time of this writing.

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

Turning Steel Into Gold: How To Quadruple Your Yield On Dividend Stocks

By Robert Hauver

Want to turn steel into gold?  Here are 4 undervalued dividend paying stocks from the Steel & Iron industry, with strong recent earnings growth, conservative debt loads, low 12-month PEG’s, which you can earn double-digit annualized yields on, via selling Covered Calls and Cash Secured Puts:

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All 4 stocks pay quarterly dividends, and 3 of them sport a very conservative dividend payout ratio.

Selling Cash Secured Puts: These 4 dividend stocks all have pretty high options yields, which you can take advantage of, and achieve a break-even price near their 52-week lows on 3 out of 4 of them.

These put option premiums pay you over 4 times up to 8 times what the dividend premiums pay during this period:

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You can find more details on these and other put options sales in our Cash Secured Puts Table. There’s also more info on the mechanics of selling puts at this article link.

Selling Covered Calls: Unlike selling cash secured put options, selling covered call options allows you to potentially participate in some price gains, if you sell calls at a strike price above the current price of the underlying shares. If the underlying shares are assigned/sold away from you, you’ll gain the difference in price between your cost/share and the strike price you sold calls at.  For example, the potential price gain for WOR is the highest one below, $1.54, ($22.50 strike minus $20.96 share price).

Selling covered calls also gives you an immediate lucrative option income stream, in addition to the dividends you’d collect. These call options pay 4 to 7 times what the dividends pay, which turns a moderate dividend yield of 2.5% to 3%+, into a double-digit annualized yield.

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You can find more details on these and other put options sales in our Covered Calls Table. Our July 22nd article offers more call options selling mechanics as well.

Valuations:

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Financials: Small cap WOR definitely wins in the mgt. efficiency, interest coverage, and operating margin comps, and has been favored by investors for it with the only price gains ytd, (See the performance table below).

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Performance/Technical Data: With Relative Strengths of around 40, all 4 stocks are on the edge of oversold territory. Only WOR has made positive price gains year to date.

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Disclosure: No positions at this time.

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