Thursday, March 24, 2022

ADM growing dividend + call premiums food for thought

Underlying Security Symbol: ADM


My portfolio has almost no exposure to food.  I sold SYY (Sysco) when their debt ballooned, I replaced that with Spartan Nash (SPTN) and had all my shares assigned as the price of Spartan ballooned.  I started a position in ADM today.

ADM meets all my criteria:

  • A catalyst, low agricultural supplies here and abroad, to help growth
  • A growing dividend
  • Growing revenue, income and EPS that beat analyst estimates
  • Call premiums that make up for a relatively low dividend yield
  • Low P/E Ratio
  • Low D/E Ratio

Dividend growth is important and ADM has delivered 5% dividend growth on the average over the past 5 years.  This alone will not offset inflation but it sure is a help.

When you add in call premiums, income potential is good.  Remember I am an income investor first and foremost.  In the case of ADM, I chose an expiration date further out, June 17, 2022.   I almost never go out further than 90 days.  With the value of time, I was able to select a strike price a little more than 10% above my basis.   Also, the longer strike price should allow me to also receive the dividend.  



Unlike recent calls I posted about, I don't want this one taken.  If it is assigned, I will find another stock to buy.  But I am hoping for a gradual increase in stock price so if this call expires, I can sell another call.

Constantly working your portfolio is the way to make a living with less risk.

 MM MoneyMadam 

Data from and Marketxls

1 comment:

MM MoneyMadam said...

ADM weakened today as Ukraine talks have a smidgen of positivity. So I am nibbling to add to my position. MM