Income Stock Investing/Suggestions/Opinions

[clarkrl2]

I updated my dogs portfolio using yield - pe to rank the industials, transports, and utilities. MRK fell off the industrials list after missing earnings but it still has a high yield. Here are the top 12 combined industrials, transports, and utilities. It's too combersome to post the indiviual indexes until I modify my spread sheets. I currently own shares of MRK(will be looking to exit probably using covered calls), INTC, and added a bull put spread on T jul 25/22.5 strikes. I will be looking to add other put spreads when the price seems right.

Stock	Dog Score	Yield	PE
T	2.55	6.15	8.7
D	4.32	4.52	8.84
PEG	5.77	4.25	10.02
EIX	5.83	3.48	9.31
TRV	6.1	2.51	8.61
EXC	6.14	4.91	11.05
INTC	7.24	3.34	10.58
CVX	7.28	2.97	10.24
NEE	7.89	3.65	11.55
AEP	8.9	5.17	14.07
FE	8.91	5.55	14.46
JNJ	8.95	3.55	12.5

[soycapital]

D.I. and clark, Thank you for continuing to post info and ideas here. I'm looking for candidates for my watch list. I'm uncomfortable buying much with the market near and over 12K. I'm looking to do a little pruning while the getting is good. Selling is not one of my strong points however it seems to me this needs to be done periodically in order to do well over the long run. I'd much rather not hassle with it by doing the old "buy and hold", just don't have the stomach for that after 08 downdraft. Seems to me sell the ones that have taken a heavy ride up and invest in an unpopular sector but strong individual stock. For example banks, Europe, etc. Cheers and good investing!

[tyfighter3]

Soy, this is just my opinion but I would stay away from Europe and look at US stocks. We are in a recovery where Europe is where we where in 2008 or at least trim your exposure in that area. Stocks like DuPont, XOM, GE will do well this year plus they pay decent dividends. US Oil Drillers should do well as well as Deep Sea Drillers.

[clarkrl2]

I entered a bull put spread position in TRV (The Travelers Companies - Property and Casualty Insurance). In the case I sold the Jan 12 exp. using the 50 (sold) and 45 (bought) strikes. I collected $105 per contract and have $395 at risk. Of course you miss out on upside potential in the stock but have much less at risk here is a comparison of 100 shares of stock to 1 contract. If you hold the stock for four quarters of dividends you can add in the $144 dividend at each price level.

Jan expy Close	stock	50/45 put spread
40	-1715	-395
42.5	-1465	-395
45	-1215	-395
47.5	-965	-145
50	-715	105
52.5	-465	105
55	-215	105
57.5	35	105

I like the put spread because for 2 contracts you collect $210 compared to the $144 you would collect owning the 100 shares of stock. You only have $790 at risk compared to $5715 at risk for 100 shares of stock. Using the spread even if the stock falls to $45/share you would lose only $790 compared to $1215 - $144 = $1071 by owning the shares. The 2 contracts to 100 shares compares favorably if the stock price at expiration is less than 57.81. At that price you start missing out on the stock appreciation. For income investing I think the put spread is clearly the better risk/reward choice.

[clarkrl2]

I've updated the spread sheet for the Dogs of the Dow type stocks but I use PE - Yield to obtain a Dog Score. I usually usually try bull put spreads similar to those outlined in danshirley's Conservative Option thread. My spreads are usually closer to the money at a price where I would be willing to be PUT. My strategy is to buy the top 5 industrials, top 3 transports, and top 2 utilities and not to sell unless they fall out of the top 10, 6, and 4 respectively. I currently own INTC, and bull put spreads on T, and TRV.

Industrials	Dog Score	Yield	PE
T	2.52	6.16	8.68
TRV	6.44	2.43	8.87
INTC	7.35	3.36	10.71
CVX	8.17	2.78	10.94
MSFT	8.53	2.47	11
JNJ	9.25	3.54	12.78
WMT	9.6	2.8	12.4
KO	10.03	2.88	12.92
HPQ	10.08	0.75	10.83
JPM	11.04	0.44	11.48
Transports	Dog Score	Yield	PE
NSC	13.85	2.45	16.3
DAL	14.15	0	14.15
UNP	15.61	1.59	17.2
GMT	16.96	3.32	20.28
CSX	17.02	1.39	18.41
JBLU	17.37	0	17.37
Utilities	Dog Score	Yield	PE
D	4.75	4.33	9.07
EXC	5.53	5.11	10.64
PEG	5.96	4.33	10.29
EIX	6.44	3.42	9.86

[ModE98]

"I Told Someone They Should Use Common Sense, They Asked Me "So, How much does it cost?"
DI.... did you reply, "A lot more CENTS than you apparently possess"

[clarkrl2]

Industrials	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
T	3.9	5.62	9.52
INTC	6.12	3.68	9.8
TRV	6.54	2.41	8.95
MSFT	8.29	2.51	10.8
CVX	8.77	2.66	11.43
JNJ	8.83	3.63	12.46
JPM	9.53	2.16	11.68
WMT	9.61	2.8	12.42
HPQ	9.63	0.78	10.41
Transports	Dog Score	Yield	PE
DAL	14.02	NA	14.02
NSC	15	2.31	17.3
UNP	16.18	1.55	17.73
CSX	18.19	1.31	19.5
UPS	18.64	2.79	21.43
R	19.27	2.13	21.4
Utilities	Dog Score	Yield	PE
D	4.5	4.41	8.91
EXC	5.54	5.1	10.65
PEG	5.91	4.35	10.26
EIX	6.3	3.45	9.75

I own shares of INTC and have bull put spread positions in T, TRV, and MSFT. The MSFT position was started this month.

[clarkrl2]

Industrials	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
T	3.76	5.5	9.26
TRV	6.06	2.59	8.64
CVX	6.95	3.03	9.99
INTC	7.72	3.12	10.83
MSFT	7.78	2.47	10.25
JPM	7.78	2.22	10.01
HPQ	9.58	0.78	10.37
KO	10.13	2.81	12.94
WMT	10.45	2.65	13.1
Transports	Dog Score	Yield	PE
NSC	15.06	2.19	17.26
UNP	15.72	1.86	17.58
CSX	16.2	1.83	18.03
UPS	16.55	2.81	19.36
JBLU	17.68	NA	17.68
DAL	17.84	NA	17.84
Utilities	Dog Score	Yield	PE
D	4.64	4.2	8.84
EXC	5.94	5.09	11.03
PEG	6.53	4.24	10.77
EIX	7.38	3.24	10.63

I still own shares of INTC. I covered the credit Put spread in T because in was only $.04 and didn't expire untill Jul. The credit Put spreads for TRV and MSFT are still open and out of the money.

[clarkrl2]

When I posted my intentions of adding S&P500 Aristocrats to this thread the question was asked "Why restrict to S&P 500 stock" The reason is the same I use the Dow 65 stocks in the previous post. These are well known companies and they mostly have options available. I work full time so this is an easy way to screen for stocks that I would be comfortable owning if put and use credit put spreads which I believe are generally safer than owning the stock. I update the lists monthly. Here are the top 10 Aristocrats using my ranking method.

S&P 500 Aristocrats	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
CTL	6.67	7.08	13.75
CB	6.83	2.38	9.21
CINF	8.42	5.17	13.59
ADM	8.67	1.88	10.55
ED	9.71	4.52	14.23
PBI	10	6.01	16.01
KO	10.13	2.81	12.94
AFL	10.21	2.18	12.39
WMT	10.45	2.65	13.1

At this time I have no positions in these 10 companies. CTL and PBI have high payout ratios so I would be inclined to favor the other eight.

[clarkrl2]

Tonight I set up a model portfolio for the aristocrats at WallStreetSurvivor. They do a pretty good job tracking dividends and I will try to remember to set up a portfolio buying $100,000 of SPY at tomorrow's open. I will have to track this myself. The model portfolio uses all of the top 10 including CTL and PBI. As a stock falls out of the top 10 I will replace it. I will try to make the updates on the first weekend of each month.

[yclept]

Thanks Clark. I'll look forward to seeing the results.

[Bluerobin]

It is really scary that you folks have so few of my dividend stocks! No, I haven't figured out how to do spreadsheets here yet. I only got pics last week!

[clarkrl2]

bluerobin, many of my div. stocks are chosen because of their long term stability. I am trying to use an approach similar to what danshirley does in the conservative options thread. So really I don't need a dividend at all but the presence of an increasing dividend for a long period of time suggest stability to me. I can then use a credit put spread to generate a return as long as the stock doesn't drop below the upper put price.

If I am put the shares I sell calls but I generally will have the call one or two quarters out so I will collect some dividends as well.

Truthfully I don't even care if this aristocrat strategy beats the S&P500 index. If the stocks aren't susceptible to as big of downturn then they work well for the credit put spreads.

[Bluerobin]

Clark, I go long term too! Here is most of what I have. Sorry, I can't do the spread sheet.

AOD	APU	BMY	CAT
CEM	EDE	GXP	kft
DD	ETG	HEP	MO
DOW	FLY	HNZ	NAT
DUK	NUE	PPL	SWX
VZ	PGN	PRU	T
WIN	PG	SJM	UGI
PNH

[clarkrl2]

Industrials	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
T	3.47	5.61	9.08
TRV	5.66	2.68	8.34
INTC	6.26	3.87	10.12
CVX	6.72	3.09	9.8
MSFT	6.8	2.68	9.47
JPM	6.83	2.41	9.23
HPQ	7.53	1.33	8.86
XOM	9.22	2.32	11.54
WMT	9.75	2.72	12.48
KO	9.8	2.87	12.67
Transports	Dog Score	Yield	PE
NSC	14.47	2.26	16.73
DAL	15.31	NA	15.31
CSX	15.47	1.9	17.37
UNP	15.49	1.88	17.37
UPS	15.67	2.92	18.59
JBLU	17.09	NA	17.09
Utilities	Dog Score	Yield	PE
D	4.71	4.18	8.89
EXC	6.02	5.06	11.09
PEG	6.61	4.22	10.83
EIX	7.18	3.29	10.47

I still own shares of INTC and have a bull put spread on MSFT and TRV.

[clarkrl2]

S&P 500 Aristocrats	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
CB	6.77	2.4	9.17
CTL	6.82	7.03	13.85
ADM	7.34	2.11	9.44
CINF	7.49	5.43	12.92
AFL	7.87	2.58	10.45
PBI	8.74	6.37	15.1
XOM	9.22	2.32	11.54
ED	9.44	4.59	14.03
TGT	9.45	2.11	11.56
WMT	9.75	2.72	12.48

These are the new top 10 from the aristocrats list. Last month I only posted the top 9 omiting TGT as the 10th ranking stock. I will update the portfolio vs. SPY later today. This month XOM will replace KO which has fallen to 11th.

[soycapital]

Thank you for keeping up on posting these. I usually check them for new ideas!

[clarkrl2]

The portfolio value for the Aristocrats as tracked by WallStreetSurvivor was $95991.90 at the market close. The dividend total was $642.60. The default settings allow for a $10 commission on each trade and calculates a 3% return on cash. I used the open price for SPY on the same day the model portfolio was started and bought 745 shares for comparison. The ETF comparison portfolio value was at $97181.35. This was an inauspicious beginning but too early to draw any conclusions.

[clarkrl2]

Industrials	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
T	3.74	5.51	9.25
TRV	5.19	2.8	7.99
JPM	6.54	2.47	9.01
INTC	6.91	3.69	10.6
CVX	7.23	2.97	10.2
HPQ	7.55	1.33	8.88
MSFT	8	2.43	10.43
XOM	9.29	2.3	11.59
WMT	9.77	2.72	12.49
KO	10.51	2.74	13.25
Transports	Dog Score	Yield	PE
DAL	14.53	NA	14.53
NSC	15.99	2.09	18.08
UNP	16.53	1.78	18.31
CSX	16.58	1.8	18.38
UPS	16.67	2.79	19.47
JBLU	18.01	NA	18.01
Utilities	Dog Score	Yield	PE
D	5.19	4.03	9.22
EXC	6.59	4.89	11.48
PEG	6.66	4.2	10.87
EIX	7.14	3.3	10.44

I currently own positions in INTC, TRV, and MSFT.

[clarkrl2]

S&P 500 Aristocrats	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
CB	6.23	2.51	8.75
CTL	6.64	7.09	13.73
CINF	7.27	5.5	12.77
ADM	7.47	2.08	9.55
AFL	7.86	2.58	10.44
PBI	8.7	6.38	15.08
XOM	9.29	2.3	11.59
TGT	9.34	2.48	11.81
WMT	9.77	2.72	12.49
ED	9.98	4.46	14.44

There were no changes to the model portfolio this month. I don't own in positions in these companies at this time. The Dow 65 model in the previous post outperformed this model. Dow65 +0.28%, S&P500 0.00%, and Aristocrats -3.45%

[clarkrl2]

As of market close JUL 6 the Aristocrats portfolio was value at $96,117.04. Tracking SPY the current value is $100,161.40. Since a quarterly dividend has not yet been added to the SPY portfolio and most of the Aristocrats have had a dividend this gap should increase. This is an inauspicious beginning for the Aristocrats.

[clarkrl2]

Industrials	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
T	2.81	5.95	8.76
CVX	5.33	3.2	8.52
JPM	5.37	2.66	8.03
INTC	5.48	4.04	9.52
HPQ	6.53	1.47	8
MSFT	7.02	2.49	9.51
TRV	7.17	3.12	10.29
XOM	7.32	2.51	9.83
WMT	8.95	2.87	11.82
GE	9.2	3.63	12.84
Transports	Dog Score	Yield	PE
CSX	11.97	2.18	14.15
NSC	12.09	2.49	14.58
UAL	12.19	NA	12.19
LUV	12.61	0.21	12.83
JBLU	13.02	NA	13.02
UPS	13.05	3.17	16.22
Utilities	Dog Score	Yield	PE
PEG	4.98	4.52	9.5
EXC	5.49	5	10.49
DUK	6.27	5.52	11.79
AEP	6.78	5.08	11.85

The model portfolio I run based on this screen had D replaced with PEG and UNP replaced with UAL. I currently own real life positions in INTC, TRV, MSFT, T, and JPM

[clarkrl2]

S&P 500 Aristocrats	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
PBI	4.19	7.39	11.58
CTL	5.7	8.6	14.3
CB	6.14	2.62	8.76
ADM	6.98	2.23	9.21
XOM	7.32	2.51	9.83
AFL	8.07	2.88	10.94
CINF	8.17	6.16	14.33
WMT	8.95	2.87	11.82
PPG	9.33	2.93	12.26
TGT	9.4	2.47	11.86

This S&P Aritocrats model portfolio has been underperforming the above dow 65 portfolio. I don't own any positions in these at this time.

Edit: In the model this month ED is being replaced with PPG

[clarkrl2]

Industrials	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
T	2.36	6.13	8.49
HPQ	3.75	1.97	5.72
JPM	4.5	2.89	7.39
INTC	4.72	4.28	8.99
CVX	5.18	3.24	8.42
TRV	6.21	3.36	9.57
XOM	6.87	2.61	9.48
MSFT	7.07	2.48	9.55
GE	8.45	3.81	12.25
WMT	8.96	2.81	11.77
Transports	Dog Score	Yield	PE
CSX	10.91	2.33	13.25
NSC	11.08	2.64	13.72
LUV	12.25	0.22	12.47
UNP	12.53	2.15	14.68
JBLU	12.71	NA	12.71
R	12.98	2.62	15.6
Utilities	Dog Score	Yield	PE
EXC	5.72	4.93	10.65
PEG	6.22	4.14	10.36
DUK	6.9	5.32	12.22
AEP	7.58	4.84	12.42

This month UAL is being replaced by LUV in the model portfolio.

[clarkrl2]

S&P 500 Aristocrats	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
PBI	3.37	7.72	11.09
AFL	5.75	3.43	9.18
CTL	5.98	8.49	14.48
CB	6.12	2.58	8.71
ADM	6.43	2.33	8.77
XOM	6.87	2.61	9.48
PPG	8.48	3.1	11.58
CINF	8.85	5.99	14.84
WMT	8.96	2.81	11.77
TGT	9.4	2.41	11.82

There were no changes in this model portfolio for this month.

[ModE98]

RRD (RRDonnelly & Sons) is currently paying about 7.25%, but the payout ratio is high, so the dividend may become under pressure. This large, old, printing company is currently undergoing a transition... see all the recent acquisitions. If these all pan out accretively and the company successfully rebuilds into a international printing, specialty packaging, design and production giant, it may be a long term gain winner as well as reasonable dividend payer.
Currently hold a modest position in RRD.

[ModE98]

D.I., Here's somewhat negative info on RRD

R.R. Donnelley & Sons Company (RRD): Provides pre-media, printing, logistics, and business process outsourcing products and services to private and public sectors worldwide. Market cap of $2.67B. Float short at 13.44%. MRQ revenue has grown 8.92% ($2,623.4M vs. $2,408.6M y/y) while MRQ accounts receivable has increased 20.70% ($2,079M vs. $1,722.5M y/y). Accounts receivable/current assets has increased from 55.82% to 65.63%, comparing 3 months ending 2011-06-30 to 3 months ending 2010-06-30. This is a risky stock that is significantly more volatile than the overall market (beta = 2.01). It's been a rough couple of days for the stock, losing 6.62% over the last week.

Hmmm, look at the short float. May be volatile for awhile. Probably will pick up some more shorts near term, but could jump 2-3 bucks if the accounts receivable trend reverses. Perhaps it may be about to change. In the meantime, not one with which to fool around.

[clarkrl2]

Industrials	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
T	2.6	6.03	8.63
JPM	3.11	3.32	6.43
HPQ	3.14	2.14	5.27
CVX	4.71	3.37	8.08
INTC	5.83	3.94	9.77
MSFT	6	3.21	9.22
TRV	6.17	3.37	9.54
XOM	6.95	2.59	9.54
DD	6.98	4.1	11.09
GE	7.89	3.94	11.83
Transports	Dog Score	Yield	PE
CSX	9.46	2.57	12.03
NSC	10.04	2.82	12.86
R	10.1	3.09	13.19
UNP	11.26	2.33	13.58
LUV	11.93	0.22	12.15
UPS	12.3	3.29	15.59
Utilities	Dog Score	Yield	PE
EXC	5.72	4.93	10.65
PEG	6.34	4.11	10.45
AEP	7.6	4.84	12.44
DUK	8.01	5	13.01

There were no changes to the model portfolio which includes 5 of the top 10 DJIA, 3 of the top 6 DJT, and 2 of the top 4 DJU. A stock is sold only when it falls out of the group for the respective index. I own positions in INTC, T, and TRV. This model portfolio has been more stable than the one based on the S&P 500 Aristocrats.

[clarkrl2]

S&P 500 Aristocrats	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
PBI	3	7.87	10.88
CTL	5.28	8.76	14.04
ADM	5.35	2.58	7.93
AFL	5.73	3.43	9.17
CB	6.05	2.6	8.65
XOM	6.95	2.59	9.54
DOV	7.72	2.7	10.43
PPG	7.89	3.23	11.12
CINF	8.42	6.11	14.53
WAG	8.45	2.74	11.18

In this model portfolio WAG and DOV replaced WMT and TGT which have fallen from the top 10. This portfolio has lagged the S&P 500 index.

[clarkrl2]

Industrials	Dog Score	Yield	PE
Ticker	$MYDOGSCORE	Yield	PEExclXorTTM
JPM	4.09	3	7.1
HPQ	4.74	1.74	6.48
CVX	4.91	3.03	7.93
MSFT	6.8	2.97	9.77
XOM	7.24	2.36	9.6
INTC	7.36	3.38	10.74
T	9.09	5.85	14.93
GE	9.7	3.68	13.38
VZ	9.72	5.33	15.05
DD	9.79	3.38	13.17
Transports	Dog Score	Yield	PE
CSX	11.73	2.13	13.87
NSC	12.5	2.27	14.77
UAL	12.62	NA	12.62
UPS	14.25	2.94	17.19
UNP	14.48	1.85	16.33
R	14.49	2.18	16.67
Utilities	Dog Score	Yield	PE
CNP	6.92	3.99	10.91
AEP	7.38	4.76	12.13
EXC	7.75	4.66	12.41
PEG	8.88	4.03	12.9

This month TRV was replaced by JPM in the model portfolio and LUV was replaced by UAL.

With real money positions my INTC were called just before ex-dividend. I still own positions in JPM, TRV and T. I am trying to enter a position in HPQ. I will likely be exiting my TRV position this month.