This Blue-Chip Stock Creates Our Next Income Opportunity
Building a stock portfolio is a work of art…
Some people like to paint their canvas with investments that appear underpriced relative to their fundamentals while others use companies with good value whose earnings are expected to increase faster than the market average. The latter is especially true if you plan to hold the asset longer.
The good news is that there’s no one correct way to build your portfolio.
But if the events we’ve witnessed over the past few years have taught us anything, it’s that blue-chip stocks are a top contender when it comes to deciding which stocks we should and shouldn’t add to our reservoir.
Blue chips are known for being the titans of their industry.
If you’re a regular poker player, then the term “blue chip” is probably familiar to you. The game of chance uses different colors to represent various dollar-based amounts, and the majority of the time, the blue chip is worth the most.
This special group of stocks typically have large market caps, solid business models, an extensive history of good-looking returns and, last but not least, make regular and growing dividend payments.
They’ve withstood the ultimate test of time and managed to gain the respect of many customers and investors along the way.
Blue-chip stocks are well-known and popular companies we’ve heard about and loved our entire lives. The products and services they provide are things we use everyday. So regardless if you’ve traded them before or not, you will still recognize many of the names in this exclusive club.
With the Federal Reserve penciling in six more interest rate hikes this year to help combat inflation and continued geopolitical tensions in Western Europe, nobody will argue against the fact that blue-chip stocks are some of the safest bets out there.
I believe any investor looking to generate steady and safe income without having to worry about market fluctuations could benefit from adding blue-chip stocks to their watchlist or if they’re feeling it, their portfolio.
This leads us to The Walt Disney Company (DIS), the high-quality stock I recommend selling a put on this week.
We recently closed out a position in Disney in March. This trade was originally opened on February 23, when DIS was trading around $148.10. We closed our position in DIS early with a gain of 2.8% in 22 days, or an annualized return of 45.9%.
Since we closed the trade, DIS has climbed higher and then retraced some of those gains to come back down to the $130 level. But it has proven time and again that it’s a great stock for both the long and short term.
Its streaming service, Disney+, quickly became one of the most popular places to watch movies and tv shows. However, it has struggled to find serious content for adults besides the Marvel and Star Wars shows.
Disney announced last Friday that “Dancing with the Stars,” a hit TV show where celebrities dance and compete against one another for judges’ points and audience votes to win a shiny mirror ball trophy, will exclusively air on Disney+ starting this fall.
The show has aired on Disney-owned network ABC for the past 15 years, but fans of the popular ballroom dancing competition will need to sign up for Disney+ if they want to tune into the next season.
Disney+ now has the chance to increase subscriber growth by exposing “Dancing with the Stars” to a brand-new and younger generation of fans, as well as shifting older viewers to its platform. The move should bring in new subscribers who haven’t thought about joining the streaming service due to its lack of content for adults or have cut the cord with cable to control monthly costs.
Disney said it’s also looking to add a lower-priced, ad-supported tier to its streaming service later this year.
Last February, Disney reported better-than-expected earnings with nearly 130 million total Disney+ subscribers. The entertainment giant anticipates its Disney+ platform to have between 230 million to 260 million subscribers by 2024.
Broadening its subscriber count is vital to Disney+ as it continues to share the streaming market with fierce competitors like Netflix and HBO.
But this media conglomerate should be on everyone’s list of low-risk stocks because of its steady growth and market-staying power. It’s a high-quality, blue-chip company that holds firm whether times are tight or prosperous.
The stock just recently flashed an Income Trader Volatility (ITV) “buy” signal.
Even though Disney isn’t set to give another earnings report until next month, analysts expect the company to report EPS of $1.21 — that’s a 53.16% bump from the same quarter last year. To minimize our risks, I am recommending a trade that is protected by strong technical support and will be open for just over two weeks.
If you’d like to learn how I’m trading Disney, I recommend the strategy we use in my premium newsletter, Income Trader.
In short, my subscribers and I use a conservative put-selling strategy to generate extra income in the market. We’re averaging a 90% win-rate on our trades — a level of success I’d challenge you to find with any other market strategy.
I understand not everyone may be comfortable with options, but you shouldn’t let that get in the way. That’s also why I recently released a special report that will tell you everything you need to know, including how some of my readers are making about $568 a week with this strategy. Simply follow this link to check it out.