A New Opportunity to Double Your Dividend Tuesday, November 19, 2013
Editor's Note: Microsoft more than doubled its dividend payouts over the past decade - which is great. But our income expert Andy Crowder recently uncovered a way to double Microsoft's dividends in a matter of months - not years. This Thursday at 2 pm, he reveals exactly how in a free, live teleconference event. Click here to sign up.
I'd say it's no stretch to call AT&T (NYSE: T) one of the more reliable dividend-growth and income investment stocks on the market. The large telecom has continually paid dividends for 100 years, and has consistently raised that dividend annually for the past 28 years.
Dividend growth is unlikely to abate, because AT&T dominates its market. It operates the largest 4G network - covering 275 million users. It also offers the largest international and domestic WI-FI coverage of any U.S. wireless carrier.
AT&T is, as you'd expect, big. It generates $130 billion in revenue annually. Size confers a degree of safety and also an economy of scale that can produce tremendous amounts of cash.
In fact, AT&T generated record cash of $39.2 billion from its operations last year.
When you generate big cash, you can return big cash to your shareholders. In 2012, AT&T repurchased 371 million shares, or roughly 6% of shares outstanding, for $12.8 billion. This year, management expects to buy back another 300 million shares worth $11 billion.
Of course, AT&T also returns big cash to its shareholders through its dividend. In 2012, it returned over $10.2 billion to shareholders. This year, AT&T investors will receive a generous $1.80 dividend per share, which produces a 5.10% yield.
A 5.10% yield is exceptional in this market, particularly considering the S&P 500 yields around 2% and the 10-year Treasury notes yield around 2.6%. When AT&T's size and safety are factored in, the yield becomes even more impressive because AT&T is such a low-risk income investment.
Even though it's a safe, high-yield investment, AT&T still offers exceptional return potential. In the past two years, the blue-chip telecom has generated a 40% total return.
But what if I told you that you could increase your income and yield on AT&T by 75% or more each year? And what if I told you that you could collect this extra income every few months in addition to your regular quarterly dividend?
I'm referring to an option strategy known as a covered call, which allows you to collect extra income from a conservative dividend stock like AT&T.
When I mention "options" to many investors, they instantly think of risky investments that are only for speculators.
Nothing could be further from the truth.
Triple your dividends with one stock -- starting Nov. 27
With so many investors grabbing up shares of blue chips, yield is getting hard to come by. In fact, the average yield of the Dow has sunk to 2.1%. But our group of investors isn't worried. We're collecting big monthly dividends... up to $550 every 30 days... from a little-known investment that yields a whopping 12%! If you'd like to tap into this income stream, and earn up to triple the dividends of even the best blue chip, click here for our full report on this opportunity.
An option is simply a contract to buy or sell shares of a stock at an agreed upon price (the strike price) at a future date. Options can be used to control large blocks of stock for a small price. But they also can be used to earn income or reduce risk. Best of all, options are traded as easily as any exchange-traded stock.
With a covered-call strategy, you buy shares of a specific stock and then sell a call option on that same stock. By doing so, you agree to sell the position at a future date and price to another investor. In exchange for giving the other investor the right to purchase the shares at a future date and price, you earn a premium in the form of a one-time upfront payment - the extra income.
So how does a covered-call strategy work with AT&T?
First, you need to own at least 100 shares of an AT&T. I say that because 100 shares of stock equal one option contract. Once you own the 100 shares, you're ready to start generating extra income.
Now, let's create the income-generating scenario: AT&T trades at roughly $35.50, which produces the 5.10% yield. By selling one covered call contract against 100 shares of AT&T, you can earn an extra $23 every two months.
So every 60 days, you give yourself the potential to collect $52 against 100 shares of AT&T. Annually that equates to $312 of extra income. This strategy safely doubles, in fact almost triples, the dividend of the stock.
So by implementing a covered-call strategy, you've taken an already high-yield income investment, AT&T, and boosted your potential income to $4.92 per share from $1.80 a share and your yield to 13.8% from 5.10%.
Are you interested in earning more income from AT&T? Would you like to earn more from other safe, blue-chip dividend stocks that you already own? If so, then I'd like to help you.
On Thursday at 2 p.m. ET, I'll be hosting a live teleconference event. This investing seminar - "Double Your Dividends with Stocks You Already Own" - is a free teleconference that is available to Income and Prosperity readers.
During this event, I'll show you exactly how you can earn more income from Microsoft and other blue-chip dividend stocks. If you want to learn more about this investing strategy for earning more income, I invite you to register for the teleconference event.
Own this Stock Before Dec. 31st -- The Day Mobile Takes Over
Soon, the majority of Internet traffic will originate from mobile devices including smartphones and tablets. And even though Apple is selling over 200 million iPhones this year alone... Here at Wyatt Research, we're NOT adding shares of Apple today. We're recommending the one company no one is taking about... the one reaping massive profits each time a new Apple or Samsung smartphone is activated. In fact, its stock is set to soar 117%! And its shares are already on the move -- it's up 20% in the last month alone! So, before this stock moves any higher, read our latest report for all the details: Click here for the full story.
Popular Analysis from Wyatt Research
Monday, November 18, 2013 My Favorite Growth Trend It's usually a challenge to select one single growth trend that is more powerful than the rest. But that's not the case these days - it has to be the boom in U.S. oil and gas production.
Thursday, November 14, 2013 The Bear Call Spread Strategy Over the past several weeks, the combination of rising stocks and falling bonds has led to an unusual and extreme precedent between the two asset classes.
WyattResearch.com is owned and published by Wyatt Investment Research. Wyatt Investment Research is neither a registered investment adviser nor a broker/dealer. Readers are advised that this electronic publication is issued solely for information purposes and should not to be construed as an offer to sell or the solicitation of an offer to buy any security.
We encourage you to review our full Email and Disclosure policies. To view our Email Policy, please click here. To view our Disclosure Policy, please click here.
If you believe this communication to be a mistake or unsolicited, please e-mail email@example.com with details regarding your situation, and we will be sure to promptly investigate your situation.