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.
Dividend Amount: 34 cents
Ex-Dividend Date: June 6, 2012
Beta: 0.48 Strategy: 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).
Dividend Amount: 41 cents
Ex-Dividend Date: June 04, 2012
Beta: 1.45 Strategy: Buy Stanley Black & Decker stock and offer to sell the June $67.50 strike or lower call for 53 cents more than the intrinsic value. If my shares are called away before trading ex-dividend (resulting from the option buyer wanting the dividend), I gain about 53 cents. The most I can make is 94 cents if I hold the covered call through option expiration day and the stock gets called. Stanley's price has moved lower to test support near the 200-day moving average. A break below that average is bearish (especially a second break below). Coca-Cola Enterprises Inc. ( CCE) Coca-Cola Enterprises, Inc. produces, distributes, and markets nonalcoholic beverages. It provides still and sparkling waters, juices, sports drinks, juice drinks, coffee-based beverages, and teas. Coca-Cola Enterprises, Inc. The company was founded in 1986 and is based in Atlanta.
Dividend Amount: 16 cents
Ex-Dividend Date: June 06, 2012
Beta: 1.19 Strategy: Buy Coca-Cola Enterprises stock and offer to sell the June $28.00 strike or lower call for 46 cents over the intrinsic value. What really makes this a strong dividend capture is the unlikeliness of the shares called away before the dividend. If CCE does move up enough to incentivize option owners to call the shares early, the gain is almost 2% for two weeks. The 200-day moving average is $26.85, supporting the hedge against anything other than really bad news about the company.
Dividend Amount: 10 cents
Ex-Dividend Date: June 6, 2012
Beta: 0.73 Strategy: This is a Lotto ticket play unless you're already bullish on Frontier. If you're bullish it may be better to buy the June $3.00 strike for 6 cents over intrinsic value instead of buying stock. At a current cost of about 35 cents, and virtually zero time decay between now and the day before trading ex-dividend, this is as close as you get to a free ride on Wall Street. Buying the option instead of the stock is like catching a falling knife with your bare hands vs. catching the knife with leather gloves on. You can cut your risk buying options to 10% for the same relative number of shares compared to buying the stock outright, giving up almost none of the upside for two weeks. Praxair, Inc. ( PX) Praxair, Inc. engages in the production, distribution, and sale atmospheric and process gases, as well as surface coatings in North America, Europe, South America, and Asia.
Dividend Amount: 55 cents
Ex-Dividend Date: June 5, 2012
Beta: 0.84 Strategy: Like Frontier, only better, Praxair is another falling knife appearing to be ready for a bounce. I would wait and look for an entry price of less than $108 this week. A gap down like the one on March 6 followed by a reversal would get me interested. I would look to buy June $95.00 or $100 strike call for 20 cents over the intrinsic value. No reason to try to capture the dividend, the option will most likely get an early exercise and reaching for 55 cents with a $100 stock can end badly fast.
Dividend Amount: 11 cents
Ex-Dividend Date: June 8, 2012
Beta: 1.80 Strategy: Buy Legg Mason stock and offer to sell the June $23.00 strike or lower call for 66 cents over the intrinsic value. After qualifying for the dividend, I will look to close out the covered option with a gain of about 46 cents, plus the dividend received. I don't want the option hedge unless the sale will provide at least the minimum 66 cents over intrinsic value. The value in this trade is the combination of option premium and dividend received. One or the other on its own isn't very attractive. At the time of publication, the author did not hold a position in any securities mentioned.