Ep92 - Dividend Investing Using Options

In this episode, Dan explains how dividend investing and options can work together. He covers dividend yield, payout ratios and how cash-secured puts can help investors target a stock price that produces the dividend yield they want. Dan also explains why dividends affect option pricing, how early assignment can impact covered calls and why investors should look beyond a high yield to determine whether a dividend is sustainable. Key Topics How dividends affect stock value Understanding the ex-dividend date Why dividends are reflected in option prices Early assignment risk with covered calls How to calculate dividend yield Using the dividend payout ratio Screening for sustainable dividend stocks Targeting a desired dividend yield Using cash-secured puts to establish an entry price Combining dividends with option premium Key Takeaways A high dividend yield isn't enough. Investors should also evaluate whether the company is earning enough to support the dividend. Dividend yield rises as the stock price falls. That can create opportunities to target a more attractive entry price. Cash-secured puts can help establish that entry price. Dan uses put strikes and premium to target an effective stock purchase price that produces the dividend yield he wants. Dividend history matters. Dan also looks at factors such as consecutive years of dividend payments and dividend increases. Options and dividends can work together. Combining dividend income with accumulated option premium can add another dimension to a long-term Wheel strategy. Connect Explore the Dividend DNA tools inside the Wealth Builder platform, including dividend yield, payout ratios, P/E ratios, dividend history and other stock-selection data. Visit MarketTaker.com/tryWB to try the Wealth Builder platform for 30 days. Subscribe to Wealth Building With Options in your favorite podcast app. To learn more about Dan Passarelli and Market Taker Mentoring, visit MarketTaker.com. Disclosure: Options involve risk and are not suitable for all investors. Prior to buying or selling an option, investors must read Characteristics and Risks of Standardized Options (ODD), which can be found at https://www.theocc.com/company-information/documents-and-archives/options-disclosure-document Don’t trade with money you are not prepared to lose. Anything discussed on this show is intended to be generalized information and not intended to be a recommendation to buy or sell any security. The host and guests are not familiar with listeners’ specific situations. For trading information relevant to your specific needs, speak with a licensed broker or advisor.   Trumpet Trumpet Fanfare by bevibeldesign -- https://freesound.org/s/350428/ -- License: Creative Commons 0 Wah Wah Wah Wah wah trumpet failed joke punch line.wav by Doctor_Jekyll -- https://freesound.org/s/240195/ -- License: Attribution 4.0 Dramatic Drum Roll dramatic drum roll.wav by ingsey101 -- https://freesound.org/s/51401/  -- License: Attribution 3.0