This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

6 Low-Yield Dividend Captures

NEW YORK ( TheStreet) -- With a little work you can find lots of companies that are worth owning that also offer dividends.

Dividends can be a wonderful source of revenue, and each dividend payment decreases an investor's risk in his investment.

The basic requirement to receive a dividend is to be a shareholder on the day of record.

You can read on the Internet about plenty of strategies for capturing dividends, but many of them work better on paper than in practice.

I've developed my own strategies that I've tested by employing them in real trades.

Every once in a while the hedge I employ isn't enough to offset a strong adverse move, but I find that by entering into multiple trades, the gains I make more than offset the losses on the few trades that don't pan out.

Although much of the gains will come from dividends, option decay can also provide a return. This is especially true for lower-yielding dividend stocks.

Lower-yielding dividend captures have both pros and cons. Obviously, a lower yield will have less dividend to capture, but this is often more than offset by a larger option premium, easier-to-find opportunities and lless competition in writing the option hedges.

Baxter International Inc. (BAX - Get Report)

Baxter International Inc., through its subsidiaries, develops, manufactures, and markets products for people with chronic and acute medical conditions. The company was founded in 1931 and is based in Deerfield, Ill.
Yield: 2.48%
Dividend Amount: 34 cents
Ex-Dividend Date: June 6, 2012
Beta: 0.48


Buy Baxter International stock and offer to sell the June $52.50 strike or lower call for 27 cents over the intrinsic value.

Baxter International's coming stock dividend appears to be attractive and worth the time and effort to capture. A requirement I have is that I need to be able to sell a call option in either the front, or first back month, that is in the money, and with enough premium so that I will not object to an early exercise notice (which does happen from time to time, although one can still make a profit by doing everything according to plan).

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
BAX $68.02 -0.18%
CCE $43.71 -0.77%
FTR $7.28 -0.14%
LM $55.73 0.72%
PX $120.51 0.17%


DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs