Dividend
Machine for week of April 1, 2012
Intel is such a good
company that I profiled INTC as a 2011 dividend machine and am profiling it again this week. I suppose someone out there does not know
about INTC. In my former life, when I
owned a company that performed executive physicals and fitness evaluations,
Intel was one of our customers.
What a pleasure it was
to learn about this fine company and to get to know its culture through its
executives. That was many years ago (in
the late 70’s and early 80’s) and those executives have passed on but the
culture continues.
Intel is trading at
about $27.69 today. In March, INTC
declared its most recent dividend of $.21 payable on June 1, 2012 provided you
own it before May 7, 2012. The data that
support INTC as a dividend machine are presented below.
DIVIDEND
MACHINE
|
INTC
|
Price when
profiled
|
$27.60
|
Last 4 Qtrs
Earnings
|
$2.39
|
Last 4 Qtrs
Dividends
|
$0.81
|
Current Qtr
Dividend
|
$0.21
|
Annualized Div
Yield
|
3.04%
|
No. Years Div
Increase
|
8
|
Debt/Equity
ratio
|
16.00%
|
I
really like the safety of a company with a D/E ratio of .16. But I also like INTC because it periodically
provides opportunity for covered call income in addition to their regularly hiked
dividend. I have put
forward three options opportunities I considered today.
First
we have a May expiration with a strike price of $29.
CALL OPTION
|
INTC May
|
Strike Price
|
$29.00
|
Cost Basis
|
$27.60
|
Call Premium
|
$0.32
|
Dividend
|
$0.00
|
Gain in $ if
assigned
|
$1.72
|
Call Yield
|
1.10%
|
Gain Yield
|
5.93%
|
Total Gain
Yield
|
5.93%
|
Next we have a June
expiration with a strike price of $30.
You may notice that if you sell the June or July options, you will also
get the June dividend.
CALL OPTION
|
INTC June
|
Strike Price
|
$30.00
|
Cost Basis
|
$27.60
|
Call Premium
|
$0.24
|
Dividend
|
$0.21
|
Gain in $ if
assigned
|
$2.64
|
Call Yield
|
0.80%
|
Gain Yield
|
8.80%
|
Total Gain
Yield
|
9.50%
|
Finally we have a July
expiration with a strike price of $31.
With this call option you also get the June dividend.
CALL OPTION
|
INTC July
|
Strike Price
|
$31.00
|
Cost Basis
|
$27.60
|
Call Premium
|
$0.22
|
Dividend
|
$0.21
|
Gain in $ if
assigned
|
$3.62
|
Call Yield
|
0.71%
|
Gain Yield
|
11.68%
|
Total Gain
Yield
|
12.35%
|
Intel is an excellent
company for income investors to use for the incoming producing portion of their
portfolios.
Very Truly Yours,
TheMoneyMadam
