Readers of this blog know I use covered calls extensively to boost my income. What is a girl to do with interest rates so low and with dividend stocks being priced high? I still think the best income investing during these times is to use high quality dividend stocks with covered call potential.
CAT, MCHP, and MSFT
Among the many stocks on which I tried to sell calls today are these three: Caterpillar, Microchip Technology and Microsoft. I have owned them all for a long time. As a matter of fact, Microchip (MCHP) was the very first Dividend Machine I wrote about in late 2010.
Caterpillar is so very weak. I added a little last October. I am working those shares for income with calls. I am reinvesting the dividend on my other shares, with a higher basis, as it is too late to sell them and the yield of 4.4% is good. I don't want to add anymore CAT because their EPS are less than the dividend ($.46 versus $.77) and because their revenues have collapsed ($47,011m in 2015 versus $65.875m in 2012.)
Here is the CAT call I sold today:
Microchip Technology, in an effort to grow, has acquired other companies and used debt to do it. A 1.13 D/E ratio is too high for me. Intel, for instance, has almost no debt. MCHP is not so bad a company that I need to sell it. Indeed, they are working through this acquisition. However, their dividend growth rate is so meager I will sell calls with strike prices close to the current trading price hoping the call buyer will take my shares and I can move into a higher yielding stock.
Here is the MCHP call I sold today:

Microsoft is a good dividend stock. MSFT actually meets all my fundamentals. However, it is expensive. MSFT sports a P/E (price to earnings ratio) of 40. Note that AAPL has a P/E of only 10.85.
MSFT just barely meets my dividend yield criteria of 2.75%. At today's price of $51.40 ish their yield is 2.88%. I need more than 2.88 so I am supplementing my income with calls.
Here is the MSFT call I sold today:

This post is another example of how to your dividend stocks to create more income.
M* MONEYMADAM
Disclosure: Long all with calls
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CAT, MCHP, and MSFT
Among the many stocks on which I tried to sell calls today are these three: Caterpillar, Microchip Technology and Microsoft. I have owned them all for a long time. As a matter of fact, Microchip (MCHP) was the very first Dividend Machine I wrote about in late 2010.
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English: Wheel loader (front end loader) made by the Caterpillar company. (Photo credit: Wikipedia) |
Here is the CAT call I sold today:
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Microchip Technology on trade fair Embedded World a few minutes before opening the fair, Nuremberg, Germany 2008 (Photo credit: Wikipedia) |
Here is the MCHP call I sold today:
Microsoft is a good dividend stock. MSFT actually meets all my fundamentals. However, it is expensive. MSFT sports a P/E (price to earnings ratio) of 40. Note that AAPL has a P/E of only 10.85.
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WELCOME TO Microsoft® (Photo credit: Wikipedia) |
Here is the MSFT call I sold today:
This post is another example of how to your dividend stocks to create more income.
M* MONEYMADAM
Disclosure: Long all with calls