Thursday, July 28, 2011

Should an income investor buy, sell, or hold?

         If you are an income investor, the portion of your portfolio dedicated to income includes dividend stocks (hopefully dividend machines) and some money in bonds.  You might also own income properties; income real estate is not the subject of my blog; this blog concentrates on using bonds, stocks, and call premiums to create your required monthly income.

Monday, July 25, 2011

Stocks or Bonds: JNJ a study!

logo Johnson and JohnsonImage via Wikipedia
JNJ bond or stock – the income investor’s dilemma!

                With all the economic problems facing the world, visiting this subject is appropriate.  Are bonds safer than stocks?  Should retired people, a major category of income investors buy a bond or a stock?  Are we going to have a financial meltdown that would make you want to own only cash which generates no income?  The Gold and Silver stuff is hard to eat and what a pain to make change.

Dividend Machine New Jersey Resources or a 10-year Treasury – July 25, 2011 NJR

The Great Seal of the State of New Jersey.Image via Wikipedia
                Do we not all have fantastic friends from New Jersey?  These folks have to buy energy (and they have a lot of energy) from someone and New Jersey Resources, symbol NJR takes their deposits.
                NJR will pay a dividend of $.36 on October 3, 2011 if you own it by September 13, 2011.  NJR has increased the dividend every year for at least five years and at the close on Friday July 22, 2011, NJR fetched $45.86 per share.  NJR earns (out of New Jersey resident deposits) a $1.92 and pays stockholders a $1.42 for a yield of 3.41 percent. Their D/E ratio is .75, which is very respectable for a utility.

                My theory is that if you buy stocks to provide income those companies should pay you more income than you can get from a 10-year U.S. treasury.  Tomorrow, you may be able to buy a US Treasury with a yield greater than 3 percent due to political issues. If you can buy a 10 year  U.S. treasury bond with a coupon of 3% or more at a discount to par, do it. Consider it a short-term trade.  If the price increases above par, sell it. 

Very Truly Yours,

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Tuesday, July 19, 2011

Covered Calls for more income

          Our three legged income investing stool includes dividends, interest (not much there at this point in time) and covered call premiums.  Today was a perfect day to write some calls.  Here is a list of the calls I sold today for a very nice amount of income.

Monday, July 18, 2011

Pitney Bowes, symbol PBI dividend machine for July 18, 2011

A German postage meter marking made with a Pit...Image via Wikipedia
                This week’s dividend machine is one boring company. 

Pitney Bowes, symbol PBI, was a household name a few years ago.  They made postage meters, which is pretty boring.  Now that fewer and fewer pieces of mail are used in commerce, Pitney Bowes had to make changes.  Now PBI has business activities globally serving small and medium businesses with equipment servicing, credit approval limits, and leases and internal financing operations assistance.

Nevertheless, PBI is still boring.  PBI is truly a dividend machine.  Income investors should buy this kind of company because they want a stock that will increase the dividend through thick and thin but have little hope of a capital gain.

PBI’s closing stock price on Friday July 15, 2011 was $22.13.  This is not an expensive stock.  PBI's dividend yield is 6.64 percent, which is the only non-boring aspect of this company.  With no debt, it is a very solid company.   If you own PBI by August 10, 2011, you will receive the quarterly dividend of $.37 on September 12, 2011.  Earnings are $1.46 per year.

Buy it and forget it.

Very Truly Yours,
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Friday, July 15, 2011

QCOM for additional income

Image representing Qualcomm as depicted in Cru...Image via CrunchBase          Income investors know I like companies that pay us money in dividends and Qualcomm, symbol QCOM pays a 1.52 percent dividend yield.  The dividend has increased every year for at least five years.  If you own QCOM by August 24, 2011 you will receive a $.215 dividend September 23, 2011.  QCOM is a solid company with only a .04 D/E ratio (debt to equity ratio.)

Wednesday, July 13, 2011

Dividend machines increase income for ordinary investors.

How often have you read a story describing how much money a mutual fund makes only to find your actual experience with that fund is not exactly as good as reported?  The subject of this post is not about mutual funds but about measuring income.

Monday, July 11, 2011

ESPEY manufacturing & electronics, symbol ESP dividend machine for July 11, 2011

Income investors heavily invested in traditional dividend machines like utilities, pharmaceuticals, and conglomerates take heed.  Espey manufacturing and electronics corp., symbol ESP, is a company to consider to diversify your income investing holdings.

Monday, July 4, 2011

Dividend Machine Duke Energy, symbol DUK for week of July 4, 2011

                Another widows and orphans stocks is our dividend machine profile for the week of Monday July 4, 2011; Duke Energy symbol DUK is an outstanding utility stock.

Sunday, July 3, 2011

Money machine Freeport McMoran symbol FCX

          Sometimes we find a company that just makes us so much money we cannot believe it.  IBM was such a company until it was finally taken as a covered call.  Freeport McMoran is a very different company than IBM but it has been a great money maker over the past seven months.

          I have written several posts on FCX.  On Friday I wrote another call on FCX.  Strike price is $60 and the call expires on November 11, 2011.  I received a premium of $2.10 per share.   I have written several calls on FCX for income.   My cost basis is $54.17.  In December a special dividend was paid; in May a regular dividend was paid; and in June another special dividend. 

         The point of this post is that the you need not depend only on dividend machines for income.  A little risk in a well researched stock can also provide very nice income.

          I have listed the links to each of the 6 posts on FCX.

Very Truly Yours,

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