If you missed it, we recently wrote a public article titled "7 Deadly Sins of Long-Term Investing." Number 5 on that list was the terrible pitfall of "Yield Chasing" (buying stocks simply because they offer a high yield instead looking under the hood at the fundamentals). This article reviews a specific very-high-yield company that is increasingly tempting to some investors. However, based on our fundamental review, we strongly recommend you stay away from this value trap!
This members-only post highlights our top 3 covered call stocks. Essentially, we believe writing covered calls on these three stocks is a "win-win" opportunity for income investors because if they get called you will collect the proceeds from the sale (plus the premium you will have already received), and if they don't get called then you're left holding a very attractive long-term investment that pays a big safe dividend.
CenturyLink is a big dividend (7.9%) telecom stock that is trading at an attractive price. The stock has been beat up over the last month (Mr. Market didn’t like earnings) and over the last several years (it cut its dividend in 2013, and market volatility has increased). We believe the market is overly negative on this stock, and now is a compelling time to add shares because the price is down, the valuation is attractive, and the dividend yield is outstanding.