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6 Best Choices for Dividend-Capture

NEW YORK ( TheStreet) -- Many companies offer quarterly dividends to shareholders. This can be a great source of income and with each dividend payment received, investors are able to lower their risk in an investment.

The one requirement to receive a dividend from a company is to be a shareholder on the day of record for the dividend. To be a shareholder on the day of record you must buy before the ex-dividend date and keep the shares until at least the ex-dividend date.

My first stock, Medical Properties Trust (MPW) tops this list with a 9% yield.

MPW operates as a real estate investment trust in the U.S. The company was founded in 2003 and is based in Birmingham, Ala.

Yield: 9.09%
Dividend Amount: 20 cents
Ex-Dividend Date: June 12, 2012-
Beta: 1.54

Strategy: Buy Medical Properties Trust stock and offer to sell the June $7.50 strike or lower call for 21 cents over the intrinsic value.

The option may get exercised early for a gain. In almost all cases, I sell the call option first to ensure the stock option leg is complete. If not, after qualifying for the dividend, I will want to close out the trade near breakeven.

Large yield stocks like MPW often attract a lot of interest in dividend capturing, so the option premium may be hard to get. Some brokers offer auto-adjustment to option offering sell prices. The offer for the option short leg is adjusted as the stock price moves, much like a market-maker system. To use an option hedge with MPW will all but require an auto-price adjustment due to low liquidity.

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