Writing covered calls on stocks you already own can be an attractive way to pick up extra income. However, we don’t recommend the strategy on stocks you wouldn’t want to own in the first place. For example, we believe Cisco Systems is a relatively unattractive dividend stock, and we are not interested in owning Cisco just so we can write covered calls on it. We believe there are more attractive options for increasing income, and we’ve highlighted four of them in this article.
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Income investors are frustrated with artificially low interest rates. For your consideration, we have highlighted twelve opportunities to increase your income by selling options on attractive big-dividend stocks. (Note: this article is part two of our recent article titled: Cisco Covered Calls? Here Are 4 Better Options for Income Investors).
Free Reports:
There’s lots of evidence that dividend stocks are getting expensive. For example, this article from the Wall Street Journal (The Problem With Dividend Stocks) says that “investors have pushed up their prices so high that history says they likely aren’t worth buying anymore.” Or this one that says “Going for the highest yields may backfire.” But what’s an income-focused investor to do? Rather than simply venting about how the Fed is punishing savers with their artificially low interest rates (they are), we have three tips and three investment ideas that we believe are worth considering.
The market sold off hard on Friday (the S&P 500 was down 2.5%) and big dividend stocks sold off harder (for example, the Vanguard REIT ETF was down 4%). For your consideration, we listed below 75 High Yield (>4%) REITs, and then provided specific details for our 12 favorites after Friday’s big selloff.
On Friday, the market immediately tumbled from its earlier highs when Fed Chair Janet Yellen said: “In light of the continued solid performance of the labor market and our outlook for economic activity and inflation, I believe the case for an increase in the federal funds rate has strengthened in recent months.”
Annaly may have the financial wherewithal to maintain its big dividend (11%) for more than the next few quarters, but its asset value and share price are in peril, and so is the company’s long-term dividend sustainability. The recent Hatteras acquisition is an ominous reminder of the atrocious yield curve and Annaly’s shrinking balance sheet. The upcoming REIT sector creation and approaching Fed interest rate hike may put a damper on this year’s dividend-stock hype.
Artificially low interest rates and market uncertainty make it challenging for income-focused investors to find satisfying yield opportunities. Many investors consider "Dividend Aristocrats" to be a good source of relatively safe yield. Dividend Aristocrats are S&P 500 companies that have increased their dividend payments at least 25 years in a row. In this article we highlight 5 Dividend Aristocrats that we believe are worth considering.
The Blue Harbinger Weekly:
A members-only weekly report on Blue Harbinger's investments and the market.
In a continuation of our free report titled "12 Attractive Equity Options for Income Investors," this members-only report contains the top 5. Four of the top five are call options on big-dividend stocks we currently own, and the fifth is a put option on a big-dividend REIT that we follow.
Investors generally go through multiple phases during their investment life cycle, including the contribution phase and the distribution phase. This week’s Blue Harbinger Weekly reviews a couple smart strategies for each of these two important investment phases. And we also provide an update on an attractive dividend growth stock that is flashing a buy signal right now (and yes, we own it).
Friday’s big 2.5% decline in the S&P 500 has left many investors nervous. After all, it wasn’t that long ago that the market sold off 10% to start 2016. And investors still remember late 2007 to early 2009 when stocks lost more than 50% of their value. In this week’s Weekly we discuss the merits of “moving to cash” in order to avoid the risk. We also review this week’s new investment idea, a big dividend mortgage REIT that benefits from more market turmoil.
These are the stocks we actually own in our Income Equity Portfolio. The portfolio is best for income-focused investors, and it has been constructed in accordance with the caveats we have described in parts one and two of this article (as well as a lot of other considerations too). The following table shows the number of holdings in the strategy along with their weights and dividend yields (the names and tickers are reserved for members only). This report also provides a brief August performance review and future outlook for all Blue Harbinger holdings across all three strategies (Income Equity, Disciplined Growth, and Smart Beta).
We made a new purchase in our Disciplined Growth strategy on Friday, and this week’s Weekly provides more details on the purchase. We also provide an updated holdings list with all of the details for the Disciplined Growth strategy. This week’s members-only new investment idea is the stock we purchased. We reported on this stock last week too, so this week’s “part 2” includes more details on why we believe it’s an exceptional investment opportunity right now.
This week’s Weekly is a continuation of our free report titled "5 Dividend Aristocrats Worth Considering," but in this member-only version we have included the Top 3. We currently own two of the Top 3 stocks on the list. Also, one of the stocks is this week’s members-only new investment idea (it’s an attractive big-dividend Industrial company that’s gotten even more attractive this month and this last week following some very interesting news).