dividend increase 2, High Dividend Stocks For Retirement

Brian Bollinger's article 10 Simply Safe Dividend Stocks to Buy for Retirement at InvestorPlace.com points out that low interest rates have created a challenge for investors looking for dividend stocks that will generate safe cash flows for their retirement. He looks at 10 of the best high dividend stocks that offer strong yields (4% and above) and that have a regular cash flows that insulate them from the vagaries of economic cycles.

If we take those 10 stocks and run them through Born To Sell's covered call screener to make them even more attractive, the results are 5 stocks that offer double digit covered call returns.

Brian's High Dividend Stocks

Brian likes his 10 stocks because they have increased their dividends for more than 10 consecutive years, and each one has dividend payments that are likely very safe. Six of the ten also make for double-digit covered call returns in the near term:

Symbol Ask Price Div Yield
ABBV 66.73 2.56 3.9%
DUK 82.39 3.42 4.1%
O 59.04 2.53 4.3%
QCOM 53.24 2.28 4.2%
SO 49.55 2.32 4.7%
T 39.02 1.96 4.9%

Covered Calls On Brian's High Dividend Stocks

If you plug these 6 into Born To Sell's Watchlist feature, you find several combinations of strike prices and expiration dates that yield at least 1%/month or more on an annualized basis (i.e. their Annual Return If Flat is >= 12%). For example, here are a dozen covered call combinations expiring May 19 (a 17-day trade):

high dividend stock covered calls for May

A couple of those have earnings before expiration (SO and DUK) so beware of that. And SO has an ex-dividend date before expiration (May 11 for 58 cents) which is included in the return calculations.

If we go out a month farther to the June 16 expiration, we find 8 combinations yielding 11% or more on an annualized basis, and none of which have earnings before expiration, and one of which (QCOM) has an ex-dividend date before the June 16 expiration:

high dividend stock covered calls for June

Note: These are not trade recommendations. These are candidate trades based on Brian's suggested high dividend stocks for retirement (see his article for his reasons). Do your own research, keep position sizes modest, and stay diversified.

Mike Scanlin is the founder of Born To Sell and has been writing covered calls for a long time.

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