Categories

Investing Observation & Opinion

Tools

  • Economy & Politics
  • Investing
  • Personal Finance
  • Related Posts


    Is This A Blow-Off Top? Four Ways To Tell
    Gold Flows East – China, India Import Massive Quantities of Gold from Switzerland
    The Rich Really Do Get Richer
    Nasdaq’s New High: Breakout Or Bubble?
    Biggest Earnings Reports To Watch This Week
    Check Out Intel’s Contribution To “Smart Clothing”
    Desperate “Bubble Thinking” Takes Hold On Wall Street
    3 Of The Best ETFs For 2015
    2015 Top Stock Picks: NVAX, SWKS, AMBA
    If OPEC Is Dead, How Is Saudi Arabia Still Calling The Shots In The Oil Market?
    5 Stock Funds You’ll Want To Own In The Next Bear Market
    Stock Futures Up Ahead Of Apple Earnings, Fed Meeting Later This Week
    World Shares Hit New High But Europe Rally Fades On Greece
    UK Government Would Oppose Any Takeover Of BP
    Crash Boys


    There Are Safe 15 Percent To 20 Percent Yields Available for Retirees Right Now

    Today, investors have an incredible opportunity to earn double-digit percentage rates of income.

    You simply have to look past conventional investments like bonds and mutual funds.

    You have to look at unusual income plans like "digital utilities." As I’ll show you today, this plan is paying out safe income streams of at least 15 percent.

    Traditional utility stocks have been a good friend to retirees and other income investors for generations.

    You see, if you want indoor plumbing or a refrigerator, you have to do business with the municipal utility company. In many cities, these utility companies enjoy monopoly positions. The government-guaranteed profit turns these companies into income-producing machines. Because everyone has to use their services, the payments they deliver to shareholders are secure and safe. 

    These traditional utilities still have a place in the retiree’s portfolio. But there’s an alternative type of utility company you should consider.

    These stocks are safe. They enjoy near-monopoly positions. And if you’re willing to try something a little different, you can collect annual income payments nearly four times as large as what you’ll get with traditional utilities.

    Let me explain.

    "Digital utilities" is the name I’ve given to certain dominant "big tech" companies. I’m talking about names like Intel Corp. (INTC) and Microsoft Corp. (MSFT). 

    Intel dominates the semiconductor industry. Microsoft dominates the software industry. Just like you can’t turn on the light without using power from your electrical utility, you can hardly use a computer without using these companies’ products. And because digital utility stocks don’t have to contend with nearly as much regulation as traditional utilities, they can growth their profits much faster.

    Now here’s the part where it gets interesting. Just like regular utilities, digital utilities pay reliable dividends in the 3 percent to 4 percent range. But right now, you have an opportunity to quadruple the amount of income you collect from these stocks without taking on any additional risk.

    That opportunity is selling "covered calls."

    In general terms, this strategy amounts to buying shares in safe, dividend-paying companies, like Intel and Microsoft, then selling "call options" to other traders. When you sell a call option, you’re giving other traders the right to buy your shares at a higher price.

    The process is different from just buying shares. And it takes a little while to get used to the idea. But I’ve shown thousands of readers how to do it in my Retirement Trader advisory. Once you get the hang of it, it will change the way you see income investing.

    Let me walk you through some numbers, so you can see how useful a tool this is if you’re looking for safe income.

    Right now, you can buy Microsoft for about $27.50 per share. Let’s say you buy 100 shares, for a total of $2,750. Right after buying your shares, you can sell someone the right to buy them from you for $28 each ($2,800 total) anytime between now and late May. You collect $73 for selling that right. This $73 payment represents an instant 2.7 percent yield on your shares.

    If Microsoft climbs above $28 in May, you’ll sell your shares for a modest capital gain, keep the instant 2.7 percent yield and pocket the quarterly dividend Microsoft pays along the way. All told, you’ll walk away with 5.3 percent in three months — more than 20 percent annualized.

    If Microsoft does not rise to $28 per share, you simply keep that instant 2.7 percent yield, your 100 shares and the dividend. You can continue to collect those dividends. And you can make similar trades over and over again, generating a double-digit annual cash yield.

    Readers who have followed my advice over the past couple years have been able to do just that. They’ve been able to turn a safe "utility" stock into 15 percent a year or more in income.

    That’s about four times what you can collect by simply owning shares.

    Don’t get me wrong. Regular shareholders of traditional utility stocks and "digital utility" stocks like Intel and Microsoft will do just fine over the coming years. Both investments will pay out reliable dividends. 

    But folks who are willing to do a bit more work can start earning 15 percent to 20 percent a year right now.

    Here’s to our health, wealth and a great retirement,

    — Dr. David Eifrig

    This article was originally published on Feb. 22, 2013 at DailyWealth.com.

    Dr. David Eifrig Jr. is the editor of two of Stansberry's best advisory services. One of his advisories, Retirement Millionaire, is a monthly letter showing readers how to live a millionaire lifestyle on less than you'd imagine possible. He travels around the U.S. looking for bargains, deals and great investment ideas. Already his average reader has saved $2,793 since 2008 (documented in each Retirement Millionaire issue). He also writes Retirement Trader, a bi-monthly advisory that explains simple techniques to make large, but very safe, gains in the stock and bond markets. This is a pure finance play and the reason Porter Stansberry loves having "Doc" on the team. Doc holds an MBA from Kellogg and has worked in arbitrage and trading groups with major Wall Street investment banks (Goldman Sachs). In 1995, he retired from the "Street," went to UNC-Chapel Hill for medical school and became an ophthalmologist. Now, in his latest "retirement," he joined Stansberry & Associates full-time to share with readers his experiences and ideas.

    | All posts from Dr. David Eifrig Jr.

    Discuss this Story:

    Comment Policy: We encourage open discussion. Comments including racist statements, profanity, name calling or spam will be removed at our discretion. We use filters for spam protection. If your comment does not appear it is likely because it violates the policy.

    “I’m Not Crazy, I’m Scared” – Why For One Trader, This Time It Is Different
    “Crash Boys” – Michael Lewis Slays The Regulators In The Sarao Scapegoating Debacle
    Largest Bank In America Joins War On Cash
    How The Second Tech Bubble Will Burst, In The Words Of Silicon Valley’s “Poster Child” And World’s Youngest Billionaire
    Cloud Wars: Can Microsoft Overtake Amazon?
    Should I Buy Target Stock Right Now?
    Natural Gas Price Forecast 2015: Will The Market Rebound Or Weaken?
    America’s Biggest Radio Company Is Getting Into Podcasts
    A New Microscope Uses Virtual Reality To Let You Walk Through Atomic-level Vistas
    Why Comcast Seems To Be Walking Away
    Comcast Abandons $45 Billion Time Warner Cable Merger
    Xerox Cuts 2015 Profit Forecast Due To Strong Dollar
    American Airlines First-quarter Profit Tops Expectations
    Futures Up On Tech Earnings, Nasdaq To Extend Record
    Biogen Quarter-one Results Disappoint Wall Street As Tecfidera Sales Slow
    China Plans Greater Yuan Convertibility Inside And Outside FTZs
    UBS Wealth Cuts Allocation To U.S., UK Stocks
    Documents Show Flash Crash Trader’s Frenetic Business Dealings
    U.S. Stocks: Google, Amazon Poised To Lead Nasdaq To Another Record
    How The Stock Market Destroyed The Middle Class
    Yemen Strife Pushes Brent Crude Oil To 2015 High
    Flash Crash Rights And Wrongs
    The Reasons For A Meandering Market
    The Village Turns Against Free-Range Parents
    Notable Developments In Gold
    Caught On Tape: Cop Jumpkicks Suspect After Shooting Him
    Why Are Oil & Gas Workers Mysteriously Dying Across America?
    Manning & Napier Jump Into Alibaba
    Navistar International’s Cost Cuts Make It A Stock Worth Watching
    12 Corporate Disasters You Can Profit From
    Read more from Investing...

    Liberty Investor Digest

    Get today's most important
    financial headlines all in
    one place by email!



    Sources


    close[X]

    Sign Up For Liberty Investor Digest™!

    Get Liberty Investor Digest FREE By Email!

    Input your name and email address in the fields below and get today's most important financial headlines sent straight to you inbox!

    Privacy PolicyYou can opt-out at any time. We protect your information like a mother hen. We will not sell or rent your email address to anyone for any reason.