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Add Covered Calls to Your Dividend Strategy
Many investors have turned to a dividend strategy as a way to generate income in today’s low interest rate environment. Unfortunately, most high-dividend strategies are relegated to specific sectors, such as utilities or real estate, which limits diversification and access to high-growth opportunities in tech and other sectors that tend to pay low or no […]
How Dividends Impact Option Pricing
Dividend stocks are a popular way to generate income, but they also impact several other investment strategies. For example, dividends impact option pricing. Let's say that an investor that’s selling call options to generate an income should be aware of how option prices behave when a company announces and pays a dividend to avoid any […]
The Impact of Dividends on Covered Calls
More than 80 percent of large-cap companies in the S&P 500 index pay dividends, along with about 70 percent of mid-cap companies and just over half of small-cap companies. Many retirees rely on dividend income to fund their retirement without selling stock. Since covered call strategies are a great way to enhance the income from […]
Dividends Play a Big Part in Performance
Many investors fail to appreciate the substantial impact that dividends have on stock performance over time. According to Hartford Funds, more than 80 percent of the total return of the S&P 500 index between 1960 and 2016 is attributed to the compounding of reinvested dividends. The same study found that companies that grew or initiated dividends […]