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Two Industrial Dividend Stocks With 30% Covered Call Yields

ByDouble Dividend Stocks
Published 08/11/2012, 10:45 PM
Updated 07/09/2023, 06:31 AM

Standard Motor Products, (SMP), and Worthington Industries, (WOR), are both on a roll this summer, having rallied significantly since the June 4th lows:
SMP-CHart
WOR-Chart
Dividends: SMP goes ex-dividend next week, and WOR goes ex- in early September:
SMP-WOR-DIVS-AUG-12
Covered Calls: As you may have noticed on the 2 charts above, both SMP and WOR are currently showing as being overbought on their respective stochastic charts. This overbought condition often offers the best covered call option yields, and also helps to lock in some of your profits. Both of these dividend stocks currently have very high options yields for their covered calls.

Here are are 2 trades from our Covered Calls Table:

Even though SMP and WOR aren’t high dividend stocks, their options pay out over 6 times their dividend amounts in these 2 trades. The WOR covered call is in the money, with a strike price that’s slightly lower than SMP’s $22.53 price per share. The SMP price is above SMP’s price per share, and thus offers an potential assigned yield of 7.64%, ($.34/share difference between the $17.50 strike price, and SMP’s $17.16 share price.) The SMP is a longer term trade, expiring on November, hence its lower annualized yield:
SMP-WOR-CALLS-AUG-2012
Disclosure: Author had no positions in any of the stocks mentioned in this article at the time of this writing.

Disclaimer: This article is written for informational purposes only and isn’t intended as investment advice.

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