High yield is hard to find these days. Ben Bernanke and the Fed have seen to that.
The Federal Reserve plans to keep interest rates near zero until at least 2015. Until then, Treasuries, CDs and the money market will remain unappealing. Dividend stocks are a more enticing option, with S&P 500 companies growing their dividends faster than at any point in history. But even they only average a modest 2% yield.
To find true high yield these days, investors must look elsewhere. And that’s precisely what our income expert Andy Crowder does.
Andy and Wyatt Research founder Ian Wyatt are helping investors like you earn high yields from some of America’s biggest companies. This Thursday at 2 p.m. ET, they’ll reveal how they do it in a FREE teleconference titled, “60-Second Dividends: Instant Income from Blue-Chip Stocks.”
Introduction to Blue-Chip Stocks
As Ian and Andy prepare for this week’s live event, I caught up with them to talk about their unique income-generating strategy using covered calls.
Our conversation is transcribed below…
Chris: Ian, tell me what you and Andy will be discussing at Thursday’s teleconference.
Ian: I’m thrilled that Andy and I have an opportunity to share this really unique strategy. When Andy started showing me how easy it is to collect extra investment income, I was impressed.
By using a covered-call strategy, I really can earn annual yields of 8-10% from the biggest and safest blue-chip stocks. That’s what we’ll be talking about this Thursday. We’ll also be revealing the details of two specific covered-call transactions.
Chris: Andy, options are often thought of as risky or difficult to understand. Explain why that’s not the case.
Andy: Most options investors still use options as pure speculation. They don’t realize the true potential of options. They don’t want to actually think about using an options strategy to gain a true statistical advantage. They would rather guess if the stock or ETF will go up or down. Playing in such a zero sum game is a losing proposition over the long haul.
But quite honestly, that’s perfectly fine with me. Just like most floor traders and market makers, if the retail public is willing to take on a highly speculative trade, I am always willing to sell it to them.
That’s why, in most cases, I want to be the seller of options. I want to bring in credit and allow time decay to work its magic. Every successful options trader will tell you that’s the key to becoming a long-term successful options trader.
Now that we’ve reached a period in financial history that offers a low barrier to entry, it makes perfect sense to use options to their full advantage. Commissions are low and products are highly liquid. If you use the appropriate products, you really can earn extra income from your investments.
Chris: And the most conservative options approach that allows investors to earn steady monthly income with very little risk is the covered call strategy. Explain how it works.
Andy: I believe all investors need to take a serious look at covered calls – and that’s especially true for those who feel options are a highly risky trading vehicle.
A covered call is a conservative options strategy whereby an investor owns a stock or ETF and sells call options to generate increased income. Unlike buying options outright, this strategy allows you to take a conservative stance so you can sleep well at night.
All you need to initiate the strategy is 100 shares of stock and a highly liquid options market. By highly liquid, I mean heavily traded options that that have narrow bid-ask spreads. Most blue-chip stocks and many ETFs meet this requirement.
If you own at least 100 shares of stock, then you have the ability to “sell a call” against your stock (assuming it has options, which most do). Remember, 100 shares of stock equals one option contract.
It’s a simple strategy that requires a few simple transactions.
Chris: Ian, explain why this is a better strategy for income investors than simply buying shares of blue-chip dividend stocks.
Ian: It won’t surprise anyone to hear that I love dividend stocks – especially those that regularly increase their dividend. In fact, I personally have a portfolio with many of these dividend stocks.
What I’ve learned from Andy over the last year is that it’s possible to earn much more income from the stocks that I already own. Actually, it’s possible to earn at least twice the income. By using covered calls, you can pull in extra income without extra risk.
And that’s what makes this a life-changing strategy. Anyone on a fixed income – or looking to increase their investment yields – will love this simple strategy.
Ian Wyatt has found 3 stocks that pay dividends so big — you can retire on them. The Wall Street Journal calls them, “mega-dividends.” These stocks have a history of consistently RAISING their dividends… quarter after quarter. In fact, one of these cash-cranking companies hiked its dividend 10-fold! So, if these ever-increasing payouts sound good to you… Click here for all the details.