M* Money Madam : 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%