I am mixing things up today, I decided I want to be helping as much as possible anybody that happens to read this so today I am going to break down what stocks I have my eye on next week and which ones I am probably going to be trading. Before we do that I have a disclaimer; I am not a professional and this should not be considered trading or investing advice.
I have a list of stocks that are Optionable Weekly and at least a Dividend Contender, which mean they have raised their dividends for at least 10 years. This also includes Dividend Champions; those that have raised their dividends for at least 25 years. I have started looking at the stocks that have ex-dividend dates within the week and doing Buy/Writes on them. This week 10 stocks meet that criteria and I’ll briefly run through all of them as well as the criteria I judge them on. I’ll go from lowest priced to highest. Before we start let me take a second and explain the criteria I look at and what it means. I look at a stocks dividend yield history over the last 10 years and where its TTM dividend yield sits within its 10 year high and low will give it one of four possible ratings; Undervalued, Raising, Falling, or Overvalued. To earn consideration for recommendation it needs to be rated either Undervalued or Raising. In theory this means the stock has more growth potential over time (not my theory so I cannot explain why) this comes from the books Dividends Don’t Lie and Dividends Still Don’t Lie. Next is my Simple Payout %, Payout % is how much money the company pays out of earning for dividends as a percentage, the lower the number the better, for recommendation it needs to be under 75%. I just use their current dividend divided by their current EPS, it isn’t the best way to calculate it, but it gets me in the ballpark. Lastly, I look at Dividend Coverage, which is how many times the company could pay its dividend over a specific earning period, with anything less than 100% being too low for consideration for recommendation. I keep mentioning recommendations on purpose, because I only want to recommend good long term stocks I have stricter criteria. I believe all the stocks on my list are tradable stocks, but only a few can be considered buy and hold positions.
First up is GLW, currently sitting at $38.14 so that puts the lowest possible buy-in this week around the $3800 mark. GLW is a Dividend Champion currently yielding about 2.52%, but its numbers aren’t great, my Simple Payout % is 177.78% and Dividend Coverage is 60.79%. Its dividend yield is also on the lower side of its 10 year average, that range being 1% to 4% which gives it a rating of Falling on my Dividend Yield Rating. It did just raise its dividend from $.22 to $.24 which is always nice to see.
Rounding out the under $5000 class is HIG currently sitting at $49.60. Another DividendChampion with a current dividend of $.35 with is going to be a raise from its last payout of $.325. Simple Payout % is 29.41% and Dividend Coverage is 439.10%. A TTM yield of 2.67% is enough to earn a Raising rating and that makes this stock my very first Recommendation Stock. I am going to Buy/Write this one in the Rollover IRA Monday, this is a good stock for the Rollover and I think its going to workout really well.
Next up is CSX, which is the only $10K class stock on the board this week. Currently sitting at $91.50 a share with a yield of 1.22% Its numbers are really good with a 31.11% Payout % and 346.93% Dividend Coverage. The only thing holding it back from recommendation is its yield, with a TTM yield of 1.16% it scores a rating of Overvalued. Still a good stock, that I wouldn’t hesitate to trade with solid numbers and just too small a yield earn a recommendation.
The rest of the stocks I am not going to go over because of time constraints and because they are all in the over $10K class of stocks that I just don’t think I will be able to buy into this week. But they are; NKE, JNJ, UNP, MCD, NOC, LMT, and SPGI. None of them were able to earn a recommendation, mostly because yields are low.
To close everything out I am just going to give a short brief on the accounts, specifically what looks to be closing ITM and therefore freeing up capital next week. T is sitting ITM in the Options IRA which will give me some money to trade in that account, MCY, UNM, and PBCT are all ITM in the Rollover IRA as well. Everything else is going to be rolled. Look for an account update Wednesday.
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