High-Yielding Dividend Captures: Right Companies Can Offer Superior Returns

Deere & Co.

Deere & Co. (DE) is the one world's foremost producers of agricultural equipment as well as a leading maker of construction, forestry, and commercial and consumer equipment. The company was founded in 1837 and is based in Moline, Ill.
Yield: 2.61%
Dividend amount: 46 cents
Ex-dividend date: June 27
Beta: 1.53

Strategy: Buy Deere stock and offer to sell the July $67.50 strike or lower call for 87 cents over the intrinsic value. I will try to close out the trade with a gain of near 26 cents, plus dividend.

The most I can make is $1.33 if I hold the covered call through option expiration day and the stock gets called away.

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Illinois Tool Works

Illinois Tool Works (ITW) makes and markets a variety of products and systems that provide specific, problem-solving solutions for a diverse customer base worldwide. The company was founded in 1912 and is based in Glenview, Illinois.
Yield: 2.65%
Dividend amount: 36 cents
Ex-dividend date: June 27
Beta: Beta: 1.18

Strategy: Buy Illinois Tool Works stock and offer to sell the July $52.50 strike or lower call for 62 cents over the intrinsic value. I will try to close out the trade with a gain of near 41 cents, plus dividend.

The profit potential is 98 cents if I hold the covered call through option expiration day and the stock gets called away.

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Cypress Semiconductor

Cypress Semiconductor (CY) designs, develops, makes and markets a broad line of high-performance digital and mixed-signal integrated circuits for a range of markets. The company was founded in 1982 and is headquartered in San Jose, Calif.
Yield: Yield: 3.56%
Dividend amount: 11 cents
Ex-dividend date: June 26
Beta: 1.34

Strategy: Buy Cypress stock and offer to sell the July $12 strike or lower call for 35 cents over the intrinsic value. I will try to close out the trade with a gain of near 25 cents, plus dividend.

The most I can make is 46 cents if I hold the covered call through option expiration day and the stock gets called away.

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Dow Chemical

Dow Chemical (DOW) is a science and technology company that provides innovative chemical, plastic and agricultural products and services to many essential consumer markets. The company was founded in 1897 and is based in Midland, Mich.
Yield: Yield: 4.2%
Dividend amount: 32 cents
Ex-dividend date: June 27
Beta: 2.34

Strategy: Buy Dow stock and offer to sell the July $28 strike or lower call for 27 cents over the intrinsic value. I will look to close out the covered option with a gain of about 17 cents, plus the dividend paid by the company.

The upside potential is 59 cents if held the through option expiration day and the stock gets called away.

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Kraft

Kraft (KFT) is the largest branded food and beverage company based in the U.S. and the second-largest in the world. The company was founded in 1903 and is based in Northfield, Ill.
Yield: Yield: 3.08%
Dividend amount: 29 cents
Ex-dividend date: June 27
Beta: 0.54

Strategy: Buy Kraft stock and offer to sell the July $38 strike or lower call for 51 cents over the intrinsic value. I will try to close out the trade with a gain of near 15 cents, plus dividend.

The most that can be gained is 80 cents if held through option expiration day and the stock gets called away.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

At the time of publication the author held no positions in any stock mentioned.

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