Donald Johnson

10 Best Returning Upstream MLPs

I own KMP. M* says its estimated fair value is $70. Because I sell covered calls on the stock, I've increased my annualized yield to about 15%. The risk is that the stock will be called. I try to avoid this by selling calls at out of the market strikes. If the stock is too close to a strike and there is no good trade at a higher strike, I wait for a better trade. For example, you might sell calls for 20 to 30 cents a share, or $2.40 to $3.60 a year, or more. Some months you get more and some less.