dividend increase 30, Top 10 Dow Dividend Stocks For July 2015

John Divine at InvestorPlace wrote yesterday about the Top 10 Dow Dividend Stocks for July. He pointed out that the yield on Treasuries dropped to 2.35%, while even the worst of the top 10 Dow dividend stocks yielded 3.1% (and after Monday's market drop, that's now 3.2%).

Buying blue chips for dividend yield is good but, the combination of covered call premium on top of those dividends makes for an even better blue chip income portfolio.

Top 10 Dow Dividend Yields

The top 10 Dow dividend stocks, ranked by annual dividend yield, are:

Symbol Recent Price Annual Dividend Dividend Yield
VZ46.612.204.7%
CVX96.474.284.4%
CAT84.823.083.6%
MCD95.073.403.6%
XOM83.202.923.5%
GE26.570.923.5%
PG78.922.653.4%
KO39.231.323.4%
PFE33.531.123.3%
IBM162.665.203.2%

Covered Calls On Dow Dividend Stocks

Despite the turmoil in Greece, companies like these 10 are going to be around for the long term. Buying them for dividend yield and then writing covered calls against them is a conservative, popular, income-oriented strategy.

If we plug those 10 symbols into Born To Sell's screener for the July 17 expiration, we find 8 of them have Annualized Returns If Flat (ARIF) over 10% (the missing ones are CVX and KO):

Top Dow Dividend stocks for July 2015 covered calls

For investors who enjoy an immediate dividend when writing covered calls, VZ and CAT both have an ex-dividend date prior to the July 17 expiration, and neither has an earnings release prior to July 17.

If we extend the expiration date out to August 21 then the first thing to notice is that all of the covered calls with an ARIF > 10% also have an earnings release date before expiration. 7 of the 10 stocks offer double-digit ARIF:

Top Dow Dividend stocks for August 2015 covered calls

Note: These are not trade recommendations. These are candidate trades ideas only. Do your own research, keep position sizes modest, and stay diversified.

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