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  • A Dividend Investor's Dilemma: Take Profits Or Let It Ride? [View article]
    "I use covered calls only on stocks that I am willing to sell."

    Mayhawk - Agreed! The first step in the covered call process is to identify stocks that you are willing to sell and at what price. Then you can analyze the risk/reward of the option trade...
    Feb 14, 2015. 03:09 PM | 3 Likes Like |Link to Comment
  • A Dividend Investor's Dilemma: Take Profits Or Let It Ride? [View article]
    Well said, MarkQ...you also "never go broke by taking gains"...
    Feb 14, 2015. 03:07 PM | 1 Like Like |Link to Comment
  • How To Generate Income With A Built-In Margin Of Safety [View article]
    IncomeYield - That's true, but hindsight is 20-20. Like any investment, put selling has certain gain and loss parameters. You are correct, the opportunity cost of put selling is loss of upside capital appreciation. I think your point is well taken that investors should consider all outcomes before implementing any strategy. In our opinion, put selling is a great compliment to a long-term dividend portfolio. Most dividend investors already "long the market" with the bulk of their capital...put selling allows you to be patient with the rest...
    Feb 13, 2015. 05:54 PM | Likes Like |Link to Comment
  • How To Generate Income With A Built-In Margin Of Safety [View article]
    Hi Rick - Agreed, combining puts with small purchases is a great strategy long-term!
    Feb 13, 2015. 08:58 AM | Likes Like |Link to Comment
  • How To Generate Income With A Built-In Margin Of Safety [View article]
    Hi DAL - No excuse on that other than my wife had a baby around that time...so we took a couple month break from SA. We plan to restart the DIY Dividend Investors Club series soon though. Thanks for reminding us... :)
    Feb 13, 2015. 08:57 AM | Likes Like |Link to Comment
  • How To Generate Income With A Built-In Margin Of Safety [View article]
    Hi IncomeYield - hindsight is always 20-20, but there are always situations where we wish we would have done a buy-write or a straight purchase instead of selling a put. A few that come to mind recently...WBA $57.50 put and HP $60 put.

    Every option trade that we recommend has a long-term dividend investor in mind. In other words, we won't consider selling a put or entering a buy-write transaction unless we first feel that it is a decent dividend stock to own longer term.

    That said, we view "assignment" as a good thing because it means that we get to buy the stock at a great price. Clearly, there is more upside potential for capital appreciation when you own the stock and some of those most profitable trades we have had came from assignment situations...MXIM and TUP to name a few recent assignments that worked out really well.

    Most option selling strategies have a high success rate (ours is currently 94%, including profitable assignments) as the vast majority of all options expire worthless. But as you point out, it is unlikely that any service can honestly say that they are "never assigned".

    Our intention with the MCD example was not to "bait" potential subscribers...but instead to show an example of a successful trade. Any of our subscribers will tell you that we are very open about our track record (we publish our "Scorecard" every week) and we provide subscribers ongoing recommendations on open positions (e.g., hold/sell assigned stock, write covered call, etc.). In other words, we never leave a trade behind or sweep it under the rug. Our worst trades to date?...ESV (assigned with a cost basis of ~$34) and MAT (assigned with a cost basis of ~$28.50). We still like both long-term though and now we are collecting the divies...

    While we are always looking for new subscribers, we prefer attracting like-minded investors that utilize our Option Ideas to help them manage their long-term dividend portfolios for maximum income...
    Feb 12, 2015. 11:22 PM | 1 Like Like |Link to Comment
  • How To Generate Income With A Built-In Margin Of Safety [View article]
    Able - Selling options on indexes is a similar concept and as you point out...the options are alot more liquid with more frequent strikes.

    That said, we prefer individual stocks as we utilize these option strategies to manage the risk of our dividend portfolio (and to generate more income). We use CSPs as downside limit orders for stocks that we want to own and covered calls for stocks that we are willing to sell (or take profit in).
    Feb 12, 2015. 10:01 PM | Likes Like |Link to Comment
  • How To Generate Income With A Built-In Margin Of Safety [View article]
    Hi seeking betta - it's true that selling covered calls and puts are both "moderately bullish" strategies, but the risk profile is a little different. Cash-secured puts have a bigger margin of safety and typically have a higher premium yield...whereas covered calls have greater upside potential (depending on how far out-of-the-money the strike is). We use CSPs for stocks that we feel could have some further downside pressure and buy-writes for stocks that we feel have near term upside potential.
    Feb 12, 2015. 09:55 PM | Likes Like |Link to Comment
  • The 3% Yield Club: 25 Non-REIT, Non-MLP Dividend Stocks Yielding Over 3% (Part 4) [View article]
    Chancer - Thanks for the comments. Obviously, you know and understand your risk...which is a very important aspect of investing. Your portfolio certainly isn't for the average dividend investor, but if it works for you that's all that matters...

    Cheers -- PIR
    Aug 1, 2014. 11:10 AM | 1 Like Like |Link to Comment
  • The 3% Yield Club: 25 Non-REIT, Non-MLP Dividend Stocks Yielding Over 3% (Part 3) [View article]
    That's what we show as well @nieman85 based on fiscal years ending 10/31...
    Jul 20, 2014. 08:16 PM | 1 Like Like |Link to Comment
  • Why I Don't Like To Buy S&P 500 Puts As 'Insurance' - A Rebuttal [View article]
    Jason - we appreciate the rebuttal. To be fair though, we don't suggest hedging your portfolio on a continuous basis. In your example above, you annualize the cost of the hedge, which assumes that you will always have a hedge in place. We ONLY use protective puts on a selective basis when we feel that near-term risk of a correction is high.

    We agree that buying insurance on a continuous basis is a losing proposition, but that is not what we suggested in our article.
    Jul 8, 2014. 03:05 PM | 6 Likes Like |Link to Comment
  • The 3% Yield Club: 25 Non-REIT, Non-MLP Dividend Stocks Yielding Over 3% (Part 2) [View article]
    Correct, John. All of these companies have a Relative Strength rating below 20, which is driving down their overall rating quite a bit. Sometimes we view a low RS rating as a contrarian indicator (i.e., low RS stocks are potential value plays)...
    Jul 6, 2014. 10:26 PM | Likes Like |Link to Comment
  • The 3% Yield Club: 25 Non-REIT, Non-MLP Dividend Stocks Yielding Over 3% (Part 2) [View article]
    Agreed, EyeBelieve. Now is not the time to load up...
    Jul 6, 2014. 10:23 PM | Likes Like |Link to Comment
  • The 3% Yield Club: 25 Non-REIT, Non-MLP Dividend Stocks Yielding Over 3% (Part 2) [View article]
    CharReg - We think that PAYX is worth a look for several reasons other than the 3%+ yield. As you mentioned, the company is financially strong...but the growth prospects for the business are also promising. Based on consensus estimates, PAYX is expected to grow earnings at a compound annual rate of 10% over the next 5 years. That said, we expect the company to continue to increase their dividend and we expect that their payout ratio will actually come down over the next few years.

    In addition, despite the frozen dividend for three years, PAYX has a 20+ year dividend track record with no decreases.

    Clearly, PAYX isnt the highest rated stock in our universe (overall rating of 73), but it has some positive qualities that investors should consider.

    Hope this helps.

    PIR
    Jul 5, 2014. 05:18 PM | 2 Likes Like |Link to Comment
  • DIY Dividend Investors Club (Part 5): Stocks To Watch And To Buy Now (Utilities) [View article]
    WEC is definitely closer to the Buy Zone than most Utilities. If fact, WEC is probably one of our favorite stocks in the sector right now.

    Note: If anyone wants a free Buy Zone report on WEC or any other Utility stock in our universe feel free to send us a message with your email address...
    Jul 2, 2014. 09:21 PM | Likes Like |Link to Comment
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