Monday, June 25, 2012

Boost your yield on CVX to over four percent this year!

Chevron (CVX) Dividend Machine for week of June 25, 2012


Chevron, symbol CVX, is a wonderful dividend machine.  Just look at the fundamentals presented below to see how CVX performs on our four key dividend machine criteria.  Earnings over the past four quarters have been a robust $13.62 per share; paid dividends were $3.30 per share.   At today’s stock price of about $98.90 the dividend yield is 3.64%.   CVX just raised the quarterly dividend from $.81 per share to $.90 per share.  CVX has raised the dividend every year for 19 years; moreover, this company performs like this with only a 3% D/E ratio.

CHEVRON Fundamentals



Price when profiled
$98.90
Last 4 Qtrs Earnings
$13.62
Last 4 Qtrs Dividend
$3.30
Current Dividend Yld
                                 3.64
No. of Years increased
19
Debt/Equity ratio
3.00%



Chevron is one of my favorite dividend machines because the stock is volatile enough that covered call income is often available.  If you wrote a September 22, 2012 call with a strike price of $110 your income from the call would be $.54 a share.  That call income adds over one half of a percent to the 3.64% dividend yield.  This boosts your income from Chevron to over 4% for 2012.   With Chevron’s stock price being so volatile, you just might sell the stock to the call buyer for a nifty 11.77% gain or you might keep it and write another call later in the year.

CALL OPTION CVX



Cost Basis
$98.90
Strike Price
$110.00
Call Premium
$0.54
Dividend



Gain in $ if assigned
$11.64
Call Yield
0.55%
Gain Yield
11.77%


If the buyer of your call does not take your stock before the expiration date of September 22, 2012, you should also receive the quarterly dividend of $.90.  The return looks even sweeter as is noted in the table below.

CALL OPTION CVX



Cost Basis
$98.90
Strike Price
$110.00
Call Premium
$0.54
Dividend
$0.90


Gain in $ if assigned
$12.54
Call Yield
0.55%
Gain Yield
12.68%


                Consider Chevron as a dividend machine for the income producing portion of your portfolio.

Very Truly Yours,

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