Chuck Hughes: Dividend Double Dipping

Writing monthly covered calls on high yielding stocks is one of the best overall investing strategies as you get to collect two income streams the quarterly dividend and the monthly cash received from writing covered calls. I like to invest in companies that consistently raise their dividends as these companies have a proven track record of producing profits that enable them to increase their dividend. I like to reinvest cash dividends in additional shares of stock which enables me to compound my returns. I also reinvest the cash received from selling monthly call options which provides a double compounding effect. For example, reinvesting quarterly dividends for Mark West Energy stock has reduced my cost basis for the stock to 17.02. Mark West Energy pays a $2.60 annual dividend so my annual yield is 15.2%. Writing monthly call options for MWE has an annualized return potential of about 45.8%. The total annual return potential for this stock is 61%. In this video we will learn how this low risk strategy has produced excellent returns despite the market volatility and uncertain economy.

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