Showing posts with label $QCOM. Show all posts
Showing posts with label $QCOM. Show all posts

Friday, November 20, 2015

QCOM another 2015 MoneyMadam's Dividend Machine

This post explores how Qualcomm, symbol, QCOM has evolved from an "almost Dividend Machine" to a 2015 Dividend Machine.







How many shares of Qualcomm, symbol QCOM, have passed through my hands?  The answer is many, many shares.   How many posts have I written about QCOM's potential as an income instrument?  More than a dozen posts.  But only recently has QCOM become more than an almost Dividend Machine and very good income investment to a bona fide Dividend Machine that will become my latest addition to the 2015 model portfolio.

QCOM has delivered a lot of income

Since I started writing about using dividend stocks and covered calls on those stocks, QCOM has garnered a lot of attention.  When I first wrote about QCOM the basis was about $53 http://www.themoneymadam.com/2011/01/qualcomm-option-income.html  During these past five years I have bought QCOM, sold calls, pocketed the dividends and call premiums and let my shares be assigned (called away) at very nice capital gains.  QCOM a 700 share history

QCOM is a bargain

During these five years QCOM has been volatile, hitting a high of around $82 in September of 2014 and a low of around $47 March of 2011.  

At no time during the past five years has QCOM qualified as a Dividend Machine simply because the yield was too low.   But now the steady dividend increases and precipitous decline of the stock price make this stock qualify as a 2015 Dividend Machine.  QCOM is flirting with five year lows as it trades around $49 today

QCOM Dividend Machine Fundamentals

As you know, for the purpose of this blog, I use only four criteria to select a stock for inclusion in my model portfolios.   Whenever a stock's price deteriorates to point where the dividend exceeds 3.5% which is the minimum I require for inclusion in the 2015 portfolio, you know there is some kind of trouble.  

A stock like QCOM responds to a myriad of outside factors.   China, competition for chips, new technology and on and on.    I wish I had the technical skills to siphon through all the externalities, but I do not and therefore, I depend on the four fundamentals that guide my dividend stock selection.

Qualcomm earned $3.20 per share over the past four quarters and paid out $1.92 in dividends.  I require a stock to pay more in EPS than in dividends and QCOM makes the grade easily.   Their current dividend of $.48 will be paid on December 18, 2015 provided you own the shares by November 27, 2015 the ex-dividend date.   The annualized yield is 3.9% which is well above the minimal criteria of 3.5% yield.  

Dividend growth is the third of four criteria and again QCOM beats my required dividend growth rate of at least a 4% annual dividend increase over the past five years.  QCOM's quarterly dividend 5 years ago was $.19 and their next payment will be $.48.   The dividend growth rate has been 30% per year on average which is very impressive.   Last of the four criteria is D/E ratio.   We don't want our stock to go out of business due to high leverage.  I like to see a stock with no more than a D/E ratio of 1 or within industry standard.   QCOM's D/E ratio is .341.  

QCOM's Dividend Machine Fundamentals are presented in the table below.




QCOM may not be the stock for you.  It could succumb to the negative externalities that have rendered the stock price under $50.   It could stop the robust dividend growth.  It could pile on debt.  However, I am going to take my chances on QCOM.    It has been a wonderful income investment for me and now it just may become a core holding.

TheMoneyMdadam

Disclosure:  Long QCOM with calls on some of my shares.






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Wednesday, October 7, 2015

Another QCOM income analysis

What a difference a day makes.  What difference does a month make?

When you discuss the options market people fall into one of three categories.  (1)  I don't do that stuff (2) I trade options and consider a 30 day expiration very long (3) I sell options to make more income from my stocks.









The moral of this post is to emphasize that income investors, those who fall into category number three,  must receive both the dividend and the call premium from a stock to consistently receive more income than you could from dividends alone or from covered calls alone.

I will admit that options trading has potential but for conservative investors, selling calls on solid dividend stocks is the best opportunity to add to income with relatively low risk.




  
The difference illustrated in the tables above is 1.2%.   If you sold a call with a November expiration, and your stock is called away, you will not receive the dividend.   QCOM's expected next ex-dividend date is November 30,2015.  If your stock is called away, the buyer of your stock will receive the dividend.   You still pocket the call premium and the capital gain.   Those are good outcomes.

However, if your call expires in December, and we assume you will still own the stock in November, you will receive the dividend which is expected to be held at $.48.   Let's assume your stock is called away in December.   Your gain is 17.61% versus 16.41%.   The difference is 1.2% and that can make a difference.

The other possibility is that you end up owning QCOM.  The stock price could sink and the call buyer does not exercise their right to buy your shares.   You end up pocketing the call premium for a yield on your cost of 1.59% on the November expiration or 1.94% on the December expiration.

This is an interesting study in how to use covered call on dividend stocks to boost your income and your capital gains.

TheMoneyMadam

Disclosure: Long QCOM with calls
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Friday, July 17, 2015

Selling October calls on July's call expiration day. QCOM

Another call from QCOM commands my attention.   Sold this call today.  I have loved QCOM just for this type of income.



TheMoneyMadam

Disclosure:  Long QCOM with calls









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Monday, June 29, 2015

QCOM at $59 Could Happen

I write about Qualcomm a lot because it has been such a good income stock that I have to share that kind of idea.

I buy my stocks using my four basic criteria but I allow myself leeway when I find a stock with special characteristics.   Qualcomm, symbol QCOM, is one of those special stocks.  I barely know silicon from silicone but I know dividends, growth and volatility.  When you can find a stock with a great balance sheet like Qualcomm's D/E (debt to equity ratio) of .029, that pays a good dividend while you wait for growth, that further fills your coffers with call premium money as it grows, you have made a very good pick.

Why I like QCOM

Currently, I am a touch underwater on my most recent buys of QCOM.   I sold calls and they have expired and so I sit with QCOM.   While I sit, the dividend just keeps going up.    If you owned it in May of 2010 your quarterly dividend would have been $.19.  Five years later your quarterly dividend is $48.   That makes QCOM's average annual five year dividend appreciation at 30%.  

I want $59

On a day like today with the market down 350 points, I look for opportunities.   I would like to add to my position at $59.    I am confident that even if it breaks down below $59, it will recover and I get a tasty 3.25% dividend while I wait.

In 2012 QCOM was quite volatile.  Three times it traded around $59; in February, again in August, and finally in November.   I would like to see a repeat of that volatility so I can sell calls and pocket the premium.  

Sell Calls Carefully

Careful selling of calls such as making sure the call is far enough out that you will get the dividend provided your shares are not called away is needed.   In addition to picking the right expiration, you need to pick the right strike price.    

Unless you are desperate, you do not need to sell a call with a strike price less than your basis.   I like to shoot for a 10% gain above my basis but for the right premium, I might take less.   I use my covered call calculator to make the decision for me.   If the gain totals 10% including the capital gain if it is called away, plus the call premium which is never less than 1%, and the dividend that would be paid if I hold the stock to expiration, then I go for it.

I like QCOM because it has proven to be a good income investment for me.   You may want to consider adding it to the income producing portion of your portfolio.

TheMoneyMadam

Disclosure:  Long QCOM
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Tuesday, November 8, 2011

QCOM covered calls

Image representing Qualcomm as depicted in Cru...Image via CrunchBaseIncome investors, I have written about Qualcomm as a cash cow three times during the first year of this blog.  Today was another example of how to use Qualcomm in your income investing strategy.
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Tuesday, July 19, 2011

Covered Calls for more income

          Our three legged income investing stool includes dividends, interest (not much there at this point in time) and covered call premiums.  Today was a perfect day to write some calls.  Here is a list of the calls I sold today for a very nice amount of income.
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Friday, July 15, 2011

QCOM for additional income

Image representing Qualcomm as depicted in Cru...Image via CrunchBase          Income investors know I like companies that pay us money in dividends and Qualcomm, symbol QCOM pays a 1.52 percent dividend yield.  The dividend has increased every year for at least five years.  If you own QCOM by August 24, 2011 you will receive a $.215 dividend September 23, 2011.  QCOM is a solid company with only a .04 D/E ratio (debt to equity ratio.)
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Tuesday, January 18, 2011

Qualcomm fits into our Cash Flow Strategy

Qualcomm, symbol QCOM, is an excellent example of a stock that does not make the dividend machine cut but is a stock to consider for about a 10% gain in three months by writing a covered call, cashing the dividend and hoping someone buys it from you.
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Qualcomm Option Income

Qualcomm was the topic of  choice on January 18, 2011 where I suggested we buy QCOM at $53.03; sell the April call for $.96; receive the dividend in March of $.19; then sell the stock at the strike price of $57.50. Calculate your income as $57.50 +$.96 +$ .19 = $58.65. Subtract your cost basis from your income and you have a gain of $5.62. Divide the gain of $5.62 by your cost basis of $53.03 and you have a 10.6% return in 3 months.
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