'Wells Fargo & Co. was slapped with a $185 million fine [earlier this month] for “widespread illegal” sales practices that included opening as many as two million deposit and credit-card accounts without customers’ knowledge' -read the rest from WSJ.
This is horrible. And it makes sense that the bank has been taking so much heat from Congress this week. It also makes sense that Wells Fargo shares have declined sharply this month and volatility remains high. In fact, the heightened volatility has created some attractive covered call option premiums for conservative income-focused investors that own shares of Wells Fargo. We've provided more information on Wells Fargo (and other attractive covered call stocks) below...
If you are a long-term income-focused investor, Wells Fargo continues to pay a big attractive dividend (3.4%). And the contrarian in you may even be considering buying more shares after it took another beating from Congress yesterday for its fake-account-opening scandal. But what you may not have considered is the sharp jump in premium for writing covered calls, and how this is a relatively low-risk options strategy for long-term investors to increase income.
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.
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).
Artificially low interest rates have pushed many investors out of traditional fixed income categories and into high-dividend low-volatility stocks such as AT&T. But as many of these stocks start to look expensive, some investors are now reaching into covered call strategies to eke out some extra income. In this article, we highlight five big income options that we like more than AT&T covered calls.
With interest rates near all-time lows, alternative income strategies such as covered call writing may seem increasingly attractive. However, before engaging in such a strategy, it’s important to consider the potential risks and rewards. This article provides some important considerations, and also highlights five specific opportunities for generating big income with covered calls.
We like Wells Fargo. It has a big 3.2% dividend yield, a diversified business model, and the potential for significant price appreciation. We believe recent market events (e.g. exaggerated news stories about interest rates, energy sector exposures, analyst ratings, and new regulations) have caused the stock to sell off more than it should have and created an attractive buying opportunity for long-term investors.