June 26th, 2012
Written by Mark Bern, CPA CFA
This week I welcome a new author with whom I am working to also contribute articles to seekingalpha.com under the umbrella identified as K202. He is Timour Chayipov, a Russian-born Canadian citizen who works for an American oil services firm. Timour is very experienced and adept at using options strategies to create above average income yields. We intend to co-write many articles in the future. His first article was recently published with the title “Get a Strangle Hold on the Market and Increase Your Yield.”
The article provides a step by step method of gradually lowering your invested capital on a stock to increase the yield. This strategy can reduce your invested capital (cost basis) by as much as 15-20% in the first year and 5-10% each year thereafter. It is especially effective with companies that tend to regularly increase dividends. In the end, you have taken all of your original investment out to re-invest elsewhere and your yield is far higher than it would have otherwise been under the typical buy-and-hold strategy. We hope you will enjoy this article and many others based upon this and other strategies we will be offering in future weeks.
I have continued the new series of articles discussing my Master List as well as my more established series on Enhanced Income Strategy. The Master List series is about the process I use to identify quality companies. You are welcome to jump into the series at any place or any time as each articles is written to stand well and make sense on its own, but you also may find it helpful to read the first article in the series, “The Dividend Investors’ Guide to Successful Investing” which includes a detailed outline of the process of filtering and eliminating companies to narrow the list down to a manageable level. It includes a discussion of each of my ten rules that I apply to rate each company that makes it through the full screening process.
This week’s article in the series is “The Dividend Investors’ Guide: Part IX; There is Something Appealing about Toiletries and Cosmetics.” The article provides my current assessment of the Toiletries and Cosmetics Industry, including the rating system that I use. There are two companies that stand out in the rankings of the group, while there were some notable companies excluded from my list and I explain why for each one.
My latest articles from the Enhancing Income Strategy series included an article about Applied Materials (AMAT) and Colgate-Palmolive (CL), one about AT&T (T) and another about Blackrock (BLK). Each is an update on how we are currently applying the strategy to each of the subject companies’ stocks. If you are not familiar with the strategy, please consider reading the original article as a primer titled, “My Long-Term, Enhanced Investing-For-Income Strategy.”
Finally, I also published an article on InvestingDaily.com this week to discuss one of my favorite rising dividend companies. In the article, “A Tasty Stock for Sour Times,” I discuss how McCormick’s stock has hardly dipped in either of the last two recessions while earnings and dividend just keep rising every year regardless of what the global economy is doing. This is one of a few stocks that I believe deserves consideration for every investor’s portfolio.
Looking forward to the coming week I plan to continue my “Master List” series with detail analysis and explanations of why each company survived my rigorous test. Timour and I will be including another strategy article and a specific recommendation or two that we hope you will find interesting. I hope you’ll join us and question our assessments. I always enjoy sharing and learning more from others about the companies I own or want to own. I truly believe that we all benefit from the process.
Investing articles by Mark Bern