Sunday, July 1, 2012

Give me some air or the possibility of a 13% gain!


Dividend Machine for week of July 2, 2012 Air Products (APD)


            I hate it when they listen to my thoughts as I sleep.  Last Thursday I was doing my research for this week’s dividend machine and I came across Air Products (APD) and I said to myself how did I not find this company that has raised the dividend every year for 29 years before today?   With a dividend yield north of three percent, earnings that exceed the dividend by a lot, and a very decent D/E ratio of 3%, Air Products, symbol (APD) was perfect.

            On Friday, I looked again at APD and would you not know it, the stock gained over $2 a share to close at $80.73.   This is not the first time I find a company I like only to see the stock price go up the next day.  I tell you, they listen to my dreams.   On the serious side, Air Products’ stock price has increased in concert with the chemical sector.  Since I do not use stock price to determine if a company qualifies as a dividend machine, I still like APD at $80.73 and it is my dividend machine for the week of July 2, 2012.   

            The table below shows you the strengths of APD as a dividend machine.  But here is the kicker, APD has a December $90 call for $1.20 income per share.   Look at the two tables below and you will see the data that support APD as a 2012 dividend machine and as a candidate for additional income using covered calls.

APD FUNDAMENTALS TABLE

AIR PRODUCTS (APD) Fundamentals



Price when profiled
$80.73
Last 4 Qtrs Earnings
$5.55
Last 4 Qtrs Dividend
$2.38
Current Dividend Yld
3.10%
No. of Years increased
29
Debt/Equity ratio
3.00%


APD RETURN ANALYSIS BASED ON DECEMBER 2012 COVERED CALL

Call Option AIR PRODUCTS (APD)



Cost Basis
$80.73
Strike Price
$90.00
Call Premium
$1.20
Dividend
$0.64


Gain in $ if assigned
$11.11
Call Yield
1.49%
Gain Yield
13.76%


            There is no substitute for research.  You would be surprised what you find just using our four basic criteria of dividend machines.  Consider APD as an investment for the income producing portion of your portfolio.

Very Truly Yours,

TheMoneyMadam

More information on APD from Yahoo