This Week’s Pick Is a Dividend-Paying Stocks You Can Rely On
I know I’ve done an awful lot of talking about safety the past few issues with things like rising inflation and how hawkish the Federal Reserve has been when it comes to interest rates and winding down the central bank’s balance sheet, but it’s all for a good reason…
That’s because “uncertainty” is the only certain thing in the stock market.
Extreme volatility has become the new normal in this day and age, which means we need to stick to our strategy of selling options on high-quality stocks when safe income isn’t always as easy to find.
It’s crucial that we build our portfolios in a way where they can give us steady and proportionally sized gains when the market is trading at its best, but also still be able to maintain capital when things are tight.
If you’re new to the world of trading or just simply don’t know where to begin in the current market environment, it is always good to stick with dividend-paying stocks. They’re often the most reliable and established businesses out there, which lets us feel more comfortable about parking our money there.
Dividend stocks are stocks that send you a sum of money for simply owning shares of the company. Investors typically receive these payments quarterly, but in some cases, it does happen annually.
But before you ask, no…
This money doesn’t come from capital gains you’d earn when the price of its shares rise or when you sell the stock for a profit. It is more of a bonus that is given to its shareholders in the form of cash or more stake in the company’s stock.
Nothing is better than receiving a little bit of extra cash; however, it is even sweeter when the company you’re holding has the ability to raise its dividend…
Not only is it good to invest in stocks that are able to increase their dividend payouts to shareholders every year, but it is also an indicator that they’re high-grade companies that should continue to perform through thick and thin.
And these kinds of companies can continue to pay shareholders in the worst market conditions, which means investors can experience steady gains even when the broader market is flat, or worse.
This week, I’m recommending a stock that can offer us a safe and high-income opportunity, The Southern Co. (SO).
The company has made a huge name for itself in the Utilities sectors by producing clean, safe and affordable energy. In terms of customer base, it’s the second largest gas and electric utility company in the U.S.
But clean energy isn’t the main reason why the stock has the potential to be a big-time income generator for us…
If you’re one of my long haulers (and there are plenty of you in here), then you’ve probably picked up on the fact that I often recommend selling covered calls on stocks getting ready to pull back.
For those of you who don’t know, a pullback is when a stock dips 5% to 10% from a recent high. They’re extremely similar to retracement or consolidation patterns, and typically only last one month and take another month to retrace its losses.
The point I want to make is that Southern Co. just hit a brand-new 52-week high this past Wednesday…
The 52-week high is a crucial technical indicator because it signals that more price movements are likely on the horizon. However, it could go one of two ways. If a stock hits its 52-week high, there is a good chance it will head even higher. But if the stock fails to power through it, a pullback could also be in the cards.
This time around my screens are signaling the latter…
I’m led to believe most of the recent upside is due to the company’s announcement on Tuesday that it plans to raise its dividend by $0.08% per share on an annualized basis to a rate of $2.72. This is the 20th consecutive year the utilities provider has been able to raise its dividend, so it should be no surprise the stock trended upward as a result.
The stock has a solid history of respecting its support lines and retracing shortly after hitting or trading near record highs.
If its stock price is back down at the time our options expire (and there is a good chance it will be) the good news is that our calls will expire worthless, and we get to keep the entire premium received for selling it. Or course, the bad news is that the value of the stock is down…
But that is just the name of the game and why I’m recommending a short-term trade of just one month.
Trading this way is the closest thing you can get to a “win-win” scenario when it comes to investing. And that’s why I think it’s so important for regular investors to learn how it works — especially if your primary focus is income.
Unfortunately, most investors have no clue how to do this… Even though it’s pretty straightforward and easy to learn. In order to change that, I’ve put together a special report that explains everything you need to know. Once you get started, you’ll see just how easy it is — and how you could be earning hundreds (or thousands) in extra income every single month, like clockwork. Go here to learn more now.