High Yield Stocks
High Yield Stocks
Bottom Fishing For High Dividend Stocks – Part 5
In this series, we screened for 6 parameters:
1. High Dividend Yield – Above 5 % (The S&P 500 average dividend yield is approximately 3.42%).
2. Moderate Dividend Payout Ratio – Below 50 % (The S&P’s payout ratio is approximately 59 %).
3. Less Than 40 % above 52-Week Low
4. Options Available
5. Current Ratio: Over 1.5
6. Long Term Debt to Equity: Under .5
These conservative screens yielded two solid high dividend stocks.
We then detailed the impressive yields that you could earn by either, buying these stocks outright and selling covered calls, OR, by just selling puts against them.
Given the high yields that both of these strategies afford, which is the best way to go?
As with most investing decisions, much of the answer to this question lies with your outlook for the market and for the particular stock, given your own individual investing goals. We’ve found it useful to have a checklist or “decision table” when deciding which way to invest in a well-researched stock that you believe in.
1. Market Outlook: Based on current trends, and upcoming events, where do you think the market is headed?
- Bullish: Sell Covered Calls
- Less Bullish: Sell Puts
2. Compare Annualized Yields: Since different strategies have different time horizons, the only way to truly compare them is by annualizing their yields.
Here’s a simple formula you can use for this:
(Yield % divided by number of days till expiration) times (365)
OR, you can get a quick and rough estimate by using months:
(Yield % divided by number of months till expiration) times (12 months)
You may have a long-term trade that pays you MORE money than a shorter term trade, but because your principal is tied up for longer, the annualized yield may actually be lower.
3. Cash Yield Timing: Since these 2 strategies require more cash than buying options, try to determine if you need all the cash right away vs. having it spread out in time.
- Staggered Payout: Sell Covered Calls
- Payout Now: Sell Puts
4. 52-week Low/High: Is the stock at a 52-week high, or is it still near its 52-week lows?
Selling puts that place your net cost basis near a stock’s 52-week lows has been a very successful strategy over the past 9 months for many value investors.
Likewise, selling covered calls also hedges your risk, and offers a high yield.
5. Dividend Payout/Timing vs. Option Payout/Expiration: Many financial websites have option chains that tell you how much dividend $ you’ll earn before expiration. Compare this to what you’d earn from selling puts during this same period.
6. Dividend Reinvesting: This is a powerful tool for accumulating wealth. If you’re able to reinvest your dividends, then, of course, selling covered calls is the way to go.
(These articles are written for informational purposes only and author will not be held responsible for any errors or omissions herein or any actions taken by third parties after reading these articles).
Chasing Stocks Blindly
|
|
2 pk Premium TN450 High Yield Laser Toner Cartridge Brother HL-2270DW US STOCK $33.29 |
|
|
NEW 4000 High Yield Laser Toner Cartridge Stock S1BCBO27X $25.00 |
|
|
IBM High Yield Black Correctable Film Ribbon Old New Stock $6.95 |
|
|
WealthTrack 801 | Steven Romick $19.75 “Great Investor,” Steven Romick, finalist for Morningstar’s Manager of the Decade award, discusses the contrarian investment approach that makes his go anywhere, invest in anything, FPA Crescent Fund one of the best in the business.This product is manufactured on demand using DVD-R recordable media. Amazon.com’s standard return policy will apply…. |
|
|
Epson DURABrite Ultra 68 High-capacity Inkjet Cartridge Color Multipack (1 Cyan, 1 Magenta, 1 Yellow) (T068520) $50.99 COLR MULTI INK CARTRIDGE HIGH-CAPACITYPrimary InformationConsumable Type : N/A Printer Technology : Ink-jet Output Color : Black UNSPSC CodeUNSPSC Code : 44103105 … |
|
|
Brother MFC-8480DN High-Performance Laser All-in-One with Networking and Duplex Printing $272.00 BROTHER INTERNATIONAL CORPORAT MFC8480DN – MULTIFUNCTION – MONOCHROME – LASER – PRINT COPY PC FAX COLOR SCAN Manufacturer : BROTHER INTERNATIONAL CORPORAT UPC : 012502622727… |
|
|
Epson WorkForce Pro WP-4530 Wireless All-in-One Color Inkjet Printer, Copier, Scanner, Fax (C11CB33201) $176.99 At twice the speed of inkjets and featuring the World’s Fastest auto two-sided print speeds, plus automatic two-sided copying, scanning, and faxing, the Epson C11CB33201 WorkForce Pro WP-4530 Wireless All-in-One Color Inkjet Printer delivers professional quality output while getting up to 50% less cost per page than color laser. Boasting two-sided print speeds of 9.2 ISO ppm (black) and 7.1 ISO pp… |
|
|
MTX ThunderForm FEXST01BK10A-T45 Explorer Sport Trac Amp/Sub/Box $549.95 MTX Audio ThunderForms (loaded with subs) and Bass Slammers (empty/unloaded) are the best way to utilize wastedspace in your vehicle. With this Bass Slammer, you can save the cargo space foryour cargo, not a bulky, heavy subwoofer box. This Bass Slammer is anacoustically-designed, non-resonant, airtight enclosure, with the correctinternal volume to yield optimum bass response and performance from … |
|
|
MTX ThunderForm RMP10G-T45 Gray Ranger/B-Series Reg Box w/Sub $349.95 MTX Audio ThunderForms (loaded with subs) and Bass Slammers (empty/unloaded) are the best way to utilize wastedspace in your vehicle. With this Bass Slammer, you can save the cargo space foryour cargo, not a bulky, heavy subwoofer box. This Bass Slammer is anacoustically-designed, non-resonant, airtight enclosure, with the correctinternal volume to yield optimum bass response and performance from … |
|
|
MTX Audio DDXP201T45 2 Thunder Form 10 Subwoofers, 450 Watts, For Select Dodge Vehicles $272.73 MTX Audio ThunderForms (loaded with subs) and Bass Slammers (empty/unloaded) are the best way to utilize wastedspace in your vehicle. With this Bass Slammer, you can save the cargo space foryour cargo, not a bulky, heavy subwoofer box. This Bass Slammer is anacoustically-designed, non-resonant, airtight enclosure, with the correctinternal volume to yield optimum bass response and performance from … |
|
|
Unconventional Success: A Fundamental Approach to Personal Investment $4.51 The bestselling author of Pioneering Portfolio Management, the definitive template for institutional fund management, returns with a book that shows individual investors how to manage their financial assets. In Unconventional Success, investment legend David F. Swensen offers incontrovertible evidence that the for-profit mutual-fund industry consistently fails the average investor. From excessive… |
|
|
The 16% Solution: How To Get High Interest Rates in a Low Interest World with Tax Lien Certificates $4.99 A comprehensive guide to personal finance and investment explains how to achieve the maximum financial yield in a time of low interest rates and a weak stock market, discussing such options as tax lien certificates and their benefits. 50,000 first printing…. |
|
|
Master Limited Partnerships: High Yield, Ever Growing Oil Stocks Income Investing for a Secure, Worry Free and Comfortable Retirement $14.24 Praise for Master Limited Partnerships by Richard Stooker: “This book provides a rational alternative to bonds, CDs and money market funds.” “There is a lot of information on why Master Limited Partnerships are a great income investment.” “Comprehensive, correct and timely.” In a low yield world where government bonds pay next to no interest, S&P 500 stocks pay little more than that in… |
