Wednesday, April 4, 2012

INTEL This week's dividend machine


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