Tuesday, September 6, 2016

Doubling down on CMI

Cummins Logo
Cummins Logo (Photo credit: Wikipedia)
Cummins Inc., (CMI) has been a favorite stock of mine.  I wrote about it earlier in 2016.   


CMI seemed like a good income play.  Cummins has good dividend fundamentals including a solid 3.25% dividend yield.  Moreover, it is volatile enough that calls are available. The shares I profiled in myprevious posts were indeed called away.   In my personal portfolio I added CMI at $105.59 and most shares were called away.  I still have a September $120 call working.  With the correction today, I see a new opportunity to add some more CMI and sell calls. This time I will formally add CMI to the 2016 Model Portfolio that I publish in this blog.

CMI Dividend Fundamentals

You will notice that CMI technically fails the criteria for revenue growth as my hurdle is 4% and CMI just misses.   A close look at CMI's revenue history reveals this happens quite often.  Revenues are a bit volatile but that may just be the catalyst that provides for covered call opportunities.

CMI Covered Call Opportunity

Consider Cummins, Inc, CMI for the incoming producing portion of your portfolio.

M* MoneyMadam

Disclosure:  Long CMI with multiple calls