4 Dividend Stocks You Never Knew About

American International Group (AIG)

By Chris Johnson and Jon Lewis

American International Group(AIG) was the poster child for volatility throughout much of 2009, but the stock has since settled down. Although the shares have gained more than 20% so far this year, performance has been essentially flat for the past four months. With a couple of quick pops up to $45 in April and May, the stock has remained between $35 and $40 since early March.

Currently, the stock has a host of trendlines just below the current share price (in the $37-$37.50 range) to help with support. Up ahead, the $40 level has been troublesome, defining a top in June.

Despite the flat price action, option prices remain somewhat rich, probably thanks to the remnants of 2009's wild swings. Given the current technical background, buying AIG stock and selling the AIG Aug 42 Call will provide both immediate income (of around a dollar) and plenty of room for the stock to appreciate (around 12%) over the next month.

If the stock remains flat through August expiration, the yield on the call premium is 2.8%. The gain is capped at a stock price of around $43, which translates to a return of more than 15% at current prices. Either way, not bad for a trade that's open for just a month.

Thoratec (THOR)

By Michael Shulman

This covered call as a synthetic dividend strategy also works for riskier, small-cap companies, such as Thoratec Corporation(THOR).

Thoratec is the maker of the first approved replacement heart. That's right, it makes a device that is implanted to restore lost function in damaged hearts. And the company has all the appropriate approvals and no competition.

The stock is somewhat overvalued, but the company has open field running for the foreseeable future and should grow into its valuation. Buy the stock around $45 and sell the THOR Oct 50 Calls for about $2. If you get called out at $50, you have a net profit of $7. If not, you keep writing calls to bring in more premium.

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