High-Yielding Stock Recommendation With a 7.5% Dividend

11/05/2020 10:00 am EST

Focus: OPTIONS

Marvin Appel

President, Signalert Asset Management LLC

High-dividend stocks have fared poorly this year, as have value stocks generally. If you are looking to buy high-yielding stocks for long-term income, one of my favorites is at an attractive price, states Marvin Appel of Signalert Asset Management. 

The chart below shows AT&T (T), for which $27 has been a support area in 2011 and again in 2019-2020. The current dividend yield is 7.5%, which free cash flow has been sufficient to maintain.

You can buy T at $27.50 or lower for long-term holding. Alternatively, you can buy T at 27.50 or below and write covered calls expiring 1/15/2021. With T at 27.04 (11/4 close), the $27 calls were 0.99 bid. If you establish the position the maximum total return would be a 0.52 quarterly dividend plus 0.95 time value in the option, for a potential total of 5.2% in two-and-a-half months.

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To learn more about Marvin Appel, please visit Signal Alert Asset Management.

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