Friday, January 27, 2012

Call Income Dupont DD

I am awash in cash and want to make some income.  My cash came from calls I wrote between 30 and 90 days ago that were taken.   In other words, the call buyer paid me call income and then bought my stock from me at a tidy profit to me.   I tried to buy Dividend Machines for this trade but I find more call income opportunities in what I call "almost dividend machines."

Recently I wrote about Freeport McMoran as a good income producing almost Dividend Machine and I have trade on that pending as I write.

Another consideration is Dupont.  It is not quite a Dividend Machine because it has not increased the dividend every year for the required five years.   It pays a dividend of 3.2% at today's price of about $50.79.  An April $55 call will pay you $.43 a share.   The combined yield of the dividend and the call is just above 4%.  If they take the stock you gain 9.14%. 

DD is not hugely compelling but when you need to earn income, sometimes you have take it in small increments.

See you next week.

Very Truly Yours,