The VIX level at the time analysis was 16.47 and the S&P500 was at 1,256.77.
The stocks below are from a list generated by, "Angus Robertson", at Seeking Alpha on December 22, 2010, in an article entitles, "10 High Dividend Stocks for 2011".
These stocks are all familiar to us and stocks we have owned throughout the years. As a group they represent the types of stocks that have and do work extremely well within our Buy/Write strategy. The sectors varied represented are broad based.
Symbol Name
CVX Chevron Corp. - The dividend is paid into the two later scenarios bumping the SSR and Days earnings higher. RVI's are very very high
DD E.I. Du Pont de Nemours - The dividend is paid into the two later scenarios bumping the SSR and Days earnings higher. RVI's are very very high
INTC Intel Corporation - A bedrock stock that we have been active with for years. The second most attractive profile of this group. The dividend is paid into the two later scenarios bumping the SSR and Days earnings higher. RVI's are very good.
JNJ Johnson & Johnson - Weakest overall profile of the stocks analyzed in this group. The dividend is paid into the two later scenarios bumping the SSR and Days earnings higher. RVI's are ok.
KFT Kraft Foods Inc. - A stock we have favored for a long time. Each scenario earns the dividend but the RVI's are high.
MCD McDonald's Corp - A bedrock stock. The dividend is paid into the two later scenarios bumping the SSR and Days earnings higher.
At this point the judgment is related to the Pharma sector and fundamentals. Like communications the sector its its issues but is rewarding. However, unlike Communications, the Pharma stocks looked at today have not had dramatic Spot price run ups.
MRK Merk & Co, Inc - The dividend is paid into the two later scenarios bumping the SSR and Days earnings higher. The RVI's are low which is a rare thing these days. The overall profile is attractve.
PFE Pfizer, Inc - The dividend is paid into the two later scenarios bumping the SSR and Days earnings higher. The RVI's are low which is a rare thing these days. The overall profile is attractive.
Like the Pharma's communications stocks are here to stay. Fundamentally we believe the industry is in a period of flux driven by competition (pricing), fashion (product offerings - "I want an iPhone") and Technological evolution. The impact of Moore's Law is incredible and case book. I will confess I recently switched carriers to VZ and got an Andriod system phone. This thing is amazing. I have owned Smartphones for 10 years and this phone is light years ahead on my old Palm Pro. My choice of VZ was based on practical reasons, coverage and service only, not availability of product offering.
T AT&T - T was had the top profile of all the stocks analyzed today. T and VZ have nearly identical profiles in terms of return profiles for Buy/Writes. T has a much better P/E profile with a lower dividend. The choice will come down to personal preference and fundamental analysis in this rewarding sector.
VZ Verizon Communications Inc - The P/E is too high so we revert to the Forward P/E to justify keeping it. All 3 scenarios capture the dividend. Third most attractive profile of this group. The strike price used in a 3 scenarios is $35.00, in the money by 44¢. However, if we had used the $36.00 strike price the premium in all cases would have been 1¢ less. If we used the $36.00 strike the overall impact would have been slightly lower SSR, Days Earnings and break evens, with higher Return to Call.
*Note: the tables shown are embedded .jpg files. This means that you can: 1) double left click them with your mouse to enlarge them, or 2) right click them with your mouse and choose to open them in a new window or tab, print, save, etc.
As with everything we post, we may or may not have the stock and/or strategy in place in any one of our portfolios or may add it at any time. We do not make any buy or sell recommendations. We provide basic analytical research, some short commentary of the results and encourage you to do your own thorough due diligence prior to any purchase or sale.
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