Wednesday, July 31, 2019

MDU a 2012 Dividend Machine

Good news on this 2012 Dividend Machine.


https://seekingalpha.com/news/3484327-mdu-resources-plus-2-percent-post-q2-results-raised-fy19-guidance#email_link

M* MoneyMadam

Tuesday, July 23, 2019

Nvidia chips for income

The chip sector is incredibly lucrative for selling covered calls.  You don't get paid much to wait with this chip stock, Nvidia symbol NVDA, less than a 1% dividend yield, but the calls allow you to roll them frequently.  Sell calls with short expirations is how I roll the calls on growth or low dividend yielding stocks.  I am an income investor.

NVDA $187.50 August 30 Covered Call


In this call, I bought NVDA today at $175.66 and immediately sold a $187.50 call that expires on 8/30/2019.

If I am assigned on the expiration date, I should still get the dividend.  But the dividend is barely important.

The call premium alone yields 2.33% nearly as much as INTC 2.45% and if I am assigned, I realize a 9.17% total return on these shares in 6 weeks.






M* MoneyMadam

Disclosure:  Long NVDA

Monday, July 22, 2019

Broadcom Opportunity for income

I sure wish I owned a lot more Broadcom symbol AVGO.  While the stock price volatility can make you a bit squeamish, the dividend income and call option potential make this a stock to own in your income investing portfolio.   Want to retire with income that grows, then consider AVGO.

The knock on AVGO is the price earnings ratio which is in the high 30's.   My readers may find it odd that I own a stock with such a high P/E ratio but I am not so old that I do not need some growth in our portfolio.  When I can buy growth with a good dividend and call option potential, the fear that comes with volatility is easier to handle.  I get paid to wait.

AVGO Covered Call sold today


























The ex-dividend date has not yet been announced and the date could fall after the call expires.  Using their previous history of the ex-dividend date in Septembers, we anticipate the ex-dividend date to be September 18, 2019 (source dividend max.)


Another way to look at this call is if you initiated a position today.

























AVGO Dividend Machine Fundamentals

AVGO is a dividend machine as far as yield and dividend growth.  You will notice an increase in D/E (debt to equity ratio.)  This increase would be troublesome to me if it was used only to inflate price with stock buy backs.  I interpret the increase in debt as using cheap money to fund future growth and to fund future dividend increases.

For those who prefer free cash flow to determine safety of the dividend, you can find comfort in looking at the fundamental details in the table below.


Dividend increases are very important to investors who want to retire on income that grows.  Here is a chart of AVGO's dividend increases over time.








AVGO Volatility



For the ordinary investor, AVGO is a bit expensive.  Today it trades around $297.  You have to own at least 100 shares to sell one contract.  If you want to sell calls on only part of your position to mitigate the lost opportunity if your shares are called away by the call buyer, you need over $60,000 to invest to buy at least 200 shares.

I will not add here.  However, I will add should AVGO's stock price retreats to the $250 range.

AVGO one year price range



Another idea for income investors who want to retire with income that grows.  You get paid to wait through volatility with the dividend and you have opportunities for both growth and additional income.

M* MoneyMadam

Disclosure:  Long AVGO with calls




Thursday, July 18, 2019

Bag Count - An interview with Alfred Ferol


Alfred Ferol called me, he said this is the first time in a long time nothing is going on.   What do you mean Alfred?   Well, have I heard anything from The Money Madam?  Why not? 

You are right Alfred; I am starving for ideas and have not written much lately.  I have only four call expirations this Friday.  Who can live on only four call expirations? 

Well Madam I see many cross currents in buying and selling today.  Buying and selling stocks of course, buying and selling 737 Max, buying and selling dresses and pants, buying and selling options. 

Cross currents?  The other day I saw high bag counts and indeed that is supported by the data.  (Bag counts are the number of packages shoppers carry after buying.)  Consumers are spending money.  Everywhere we go, there are construction projects.  Interest rates are consumer friendly and so is inflation. 

Is there anything negative?  Negatives?   Politics; the people we pay after we elect them are a big negative. Savings income from low interest rates is a big negative.  The unknown, unknowns are always of concern. 

Positives such as the high bag count are critical.  The most significant part of American business is a high bag count.  I would weight bag count as having a 66.5% level of significance because the consumer is 66.5% of the economy.   Everywhere we go there is a high bag count because for the last 10 years consumers didn’t have jobs.  They didn’t spend money.  Now they have jobs.  Now incomes on the entire spectrum of jobs are increasing and this leads to spending.  Is there anything Americans love to do more than to spend money? 

Will the bag count continue?  Data again are on our side.  Consumers are both spending and saving more. So, what do you suggest?  Follow unemployment trends, follow consumer trends, these are opportunities.  Of course, follow The MoneyMadam.  When these data points change, you will adjust. 

Thanks Alfred, I always enjoy your input.

M* MoneyMadam

Friday, July 12, 2019

Another CAT call

I like Caterpillar's volatility.  I just buy CAT, cash the dividend check, wait for some headline news, sell ad call, have CAT assigned and then start over.   At some point this may stop because CAT either goes up too high and I don't have the chance to add on dips, or CAT goes out of business.  I don't think going out of business will happened.  And while we wait for the global growth needed to spur growth at CAT, I will use this yellow machine as a piggy bank.



M* MoneyMadam

Tuesday, July 9, 2019

LVS Las Vegas Sands

While I am out of the office on vacation, I am still making some money.  Calls for dollars.  Here is a trade I made today.   Added a little LVS and sold this call.

         
  7/9/2019 Price on Open Call Expiration   
  LVS $63.00 9/20/2019  
  Cost Basis:   Price on Option Contract Open $63.00  
  Strike Price:   $70.00  
  Call Premium:    $0.85  
  Dividend  Exp ex-div 9/18/2019 $0.770  
       
  Call Yield on Basis   1.35%  
  Call + Dividend Yield on Basis   2.57%  
  $ Gain if Assigned   $8.62  
  Max Return  if Assigned   13.68%  
         




M* MoneyMadam

Disclosure:  Long LVS with calls

BAC Bank of America Call

While I am on vacation, I still do a little money making and will post interesting trades.  Here is one I made today.

         
  7/9/2019   Call Expiration   
  BAC $29.39 9/20/2019  
  Cost Basis:   1/15/2019 $26.57  
  Strike Price:   $31.00  
  Call Premium:    $0.48  
  Dividend  Exp ex-div 9/6/2019 $0.150  
       
  Call Yield on Basis   1.81%  
  Call + Dividend Yield on Basis   2.37%  
  $ Gain if Assigned   $5.06  
  Max Return  if Assigned   19.04%  
         



M* MoneyMadam

Disclosure Long BAC with calls

Tuesday, July 2, 2019

Second Quarter Portfolio Updates

I have updated all portfolios effective 7/2/2019.

http://www.themoneymadam.com/p/blog-page_11.html

M* MoneyMadam