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  • The 3% Club: 20 Non-REIT, Non-MLP Dividend Stocks Yielding Over 3% (Part 5) [View article]
    peterad - Thanks for the comment as it helps justify the value of a quantitative ranking system.

    Our Safety Rating measures a stock’s overall financial health by analyzing 10 different financial and profitability metrics. All else being equal, companies with stable revenues, earnings and cash flow and strong balance sheets tend to be safer investments.

    There is no random selection here. The beauty of a quantitative model is that it is based on facts...not perception. While you may perceive that JNJ should have a higher rating, the facts don't lie. That said, JNJ's Safety Rating of 85 is actually quite good...its in the the top 15 percentile of all the dividend stocks in our universe. In addition, its blended Dividend, Safety and Value rating ranks the stock in the Top 3 in our universe of stocks yielding over 3% (as highlighted in this article).

    We appreciate the fact that you may not agree with the various stock ratings on the surface, but it is unfair for you to criticize the system without looking into the data points from which they are derived. You might actually be surprised about what the data actually says...
    May 15, 2015. 12:19 PM | 1 Like Like |Link to Comment
  • Correction 2015: Are You Prepared? [View article]
    also a good strategy...
    May 7, 2015. 06:07 PM | Likes Like |Link to Comment
  • The All-Defensive Team: 20 Safe Dividend Stocks For An Uncertain Market (Part 2) [View article]
    gkom - Good comment which requires some clarification on our part. The All-Defensive Team is not meant to be a diversified portfolio in itself, but its a great list from which investors can choose a few defensive stocks for their own portfolio. Of the 20 stocks on this quarter's (Q2 2015) team, 15 are from the three main "defensive" sectors (7 Consumer Staples, 6 Utilities, and 2 Healthcare).
    May 3, 2015. 09:54 AM | 2 Likes Like |Link to Comment
  • How To Pick The Best Dividend Stocks (Part 1): Setting Up The Initial Screen [View article]
    Our view is that the momentum indicator can help investors spot and avoid the "value traps" - while we are not technicians we do think that investors can effectively utilize basic technical analysis in their investment decisions.
    Apr 27, 2015. 08:42 PM | Likes Like |Link to Comment
  • How To Pick The Best Dividend Stocks (Part 1): Setting Up The Initial Screen [View article]
    Thank you for the comment. The criteria we use for our program has over 30 metrics including the payout ratio and fcf metrics. You can find all our metrics here: http://bit.ly/Stpod9

    Stay tuned for more on our methodology!
    Apr 27, 2015. 08:38 PM | Likes Like |Link to Comment
  • A Dividend Investor's Dilemma: Take Profits Or Let It Ride? [View article]
    Great story, jeteske. 1% per month is a nice realistic goal that is actually achievable. In general, we try to target opportunities that generate an average yield of 0.5%-1.5% per month (through a combination of dividend income and option income) for both cash-secured puts and covered calls/buy-writes for our Option Ideas newsletter. You can read about our strategy here, if interested:

    http://bit.ly/1zeVAEx

    We wish you continued success!
    Feb 14, 2015. 03:37 PM | 1 Like Like |Link to Comment
  • A Dividend Investor's Dilemma: Take Profits Or Let It Ride? [View article]
    Great comment, Fcfrag! Your CMI put-selling experience is a great one to share with investors. You are getting paid to be patient on a great stock and generating more income than you would have holding the stock!
    Feb 14, 2015. 03:33 PM | 1 Like Like |Link to Comment
  • A Dividend Investor's Dilemma: Take Profits Or Let It Ride? [View article]
    The beauty of this discussion is that we are all trying to get to the same destination as dividend investors (maximize income and preserve capital)...but there are many different roads to get there. Whether you utilize options or are a buy and holder, the key to any investment plan is understanding the associated risks involved.

    In our experience, options are a great way to stick to a profit taking plan...but they are clearly not suited for every investor. That said, we do wholeheartedly believe in having an exit strategy in place (for both underperforming stocks as well as your winners). We believe (and again this is our opinion) that reallocating from time-to-time from over-valued stocks into under or fairly valued stocks is prudent investment management.

    This doesn't mean you have to give up the income from the stock as the goal of the reallocation is to keep your income stable at a minimum. For example, if you sell a high-valued stock yielding 3%...your goal is to replace it with a more fairly valued stock with the same or higher yield. The end result is that your income is the same (or higher), but you have theoretically reduced your downside risk to your capital base (assuming of course that the more fairly valued stock has less downside risk now).
    Feb 14, 2015. 03:28 PM | 7 Likes Like |Link to Comment
  • 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
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