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		<title>LEAPS Covered Calls</title>
		<link>http://www.online-investing-secrets.com/options/leaps-covered-calls/</link>
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		<pubDate>Fri, 19 Feb 2010 05:13:04 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
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		<guid isPermaLink="false">http://www.online-investing-secrets.com/?p=491</guid>
		<description><![CDATA[LEAPS Covered Calls
LEAPS covered calls are much like other stock covered call options that investors can use to generate cash income in their stock brokerage accounts, but with one important difference.  The difference is that LEAPS, or Long Term Equity AnticiPation Securities, have expiration dates longer than one year.  An example might help to explain [...]


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			<content:encoded><![CDATA[<h3>LEAPS Covered Calls</h3>
<p>LEAPS covered calls are much like other stock covered call options that investors can use to generate cash income in their stock brokerage accounts, but with one important difference.  The difference is that LEAPS, or Long Term Equity AnticiPation Securities, have expiration dates longer than one year.  An example might help to explain how to use LEAPS covered calls to your advantage.</p>
<p>First, if you are not familiar with options trading, a <a href="http://www.online-investing-secrets.com/options/call-option/" target="_self">call option</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/call-option/" target="_blank"><span>&nbsp;</span></a> gives the buyer the right, but not the obligation, to buy a pre-determined quantity of an asset, usually a stock or commodity, at the specified price (strike price), on or before the expiration date of the option contract.  A <a href="http://www.online-investing-secrets.com/options/covered-call/" target="_self">covered call</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/covered-call/" target="_blank"><span>&nbsp;</span></a>  option is just a standard call option where the seller is covering the contract with securities that are already owned in their brokerage account.  LEAPS covered calls are standardized call option contracts with expiration dates over one year away, that are secured by the shares of stock that are already owned in the sellers trading account.  Since each LEAP option contract represents 100 shares of stock, these covered options can only be sold (also known as writing a call option) based on full 100 share increments of the underlying stock that the option is being written against.  For example, if an investor holds 200 shares of General Electric (GE) in their brokerage account, they would be able to write (or sell) 2 LEAPS covered calls.</p>
<p>The longer expiration dates that LEAPs possess give long term investors the ability to get exposure to long term price changes, with no need for a combination of shorter-term option contracts. Also, the premiums (price) for LEAPs are higher than for standard options in the same stock because the increased expiration date gives the underlying stock more time to make a large price move and for the <a href="http://www.investopedia.com/terms/l/leaps.asp#" target="_blank">investors</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.investopedia.com/terms/l/leaps.asp#" target="_blank"><span>&nbsp;</span></a> to make a good profits.  Conversely, for the investor writing LEAPS covered calls, they get a higher cash payment up front for taking on the risk that they may be called out of their stock over the longer time frame contained in the covered LEAP contract.</p>
<p>One other characteristic that an investor considering writing LEAPS covered calls should consider is that the price decay of a LEAP call option is much slower than an option with a much nearer term expiration date.  For instance, if a call option with a strike price  equal to the underlying stocks current price only has a month to expiration, and the underlying stock price stays flat, the price of the call option will decline to nothing over the final month of the contract.  However, a leap contract will register a very minimal reduction in price over the same month, due to it&#8217;s longer time to expiration.</p>

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		<title>Stock Covered Calls</title>
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		<pubDate>Fri, 12 Feb 2010 05:45:28 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
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		<guid isPermaLink="false">http://www.online-investing-secrets.com/?p=487</guid>
		<description><![CDATA[Stock covered calls are a technique use by stock market investors to generate additional income from stocks that they already own in their investment portfolios.  While options 0 trading may sound scary, this technique for generating income is actually so conservative that most brokers will even let you utilize this technique in your online Individual [...]


Related posts:<ol><li><a href='http://www.online-investing-secrets.com/options/covered-option-calls/' rel='bookmark' title='Permanent Link: Covered Option Calls'>Covered Option Calls</a> <small>Covered option calls are a popular way to generate recurring...</small></li>
<li><a href='http://www.online-investing-secrets.com/options/leaps-covered-calls/' rel='bookmark' title='Permanent Link: LEAPS Covered Calls'>LEAPS Covered Calls</a> <small>LEAPS Covered Calls LEAPS covered calls are much like other...</small></li>
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			<content:encoded><![CDATA[<p>Stock covered calls are a technique use by stock market investors to generate additional income from stocks that they already own in their investment portfolios.  While <a href="http://en.wikipedia.org/wiki/Option_(finance)" target="_blank">options</a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://en.wikipedia.org/wiki/Option_(finance)" target="_blank"><span>0</span></a> trading may sound scary, this technique for generating income is actually so conservative that most brokers will even let you utilize this technique in your online Individual Retirement Account (<a href="http://www.investopedia.com/terms/i/ira.asp" target="_blank">IRA</a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://www.investopedia.com/terms/i/ira.asp" target="_blank"><span>1</span></a>).</p>
<p>A <a href="http://www.online-investing-secrets.com/options/call-option/" target="_self">call option</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/call-option/" target="_blank"><span>&nbsp;</span></a> gives the buyer the right to buy a pre-determined quantity of an asset, usually a stock or commodity, at a specified price (strike price), on or before the expiration date of the option contract.  A <a href="http://www.online-investing-secrets.com/options/covered-call/" target="_self">covered call</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/covered-call/" target="_blank"><span>&nbsp;</span></a> option is a standard call option that the seller is covering with securities that are already owned in his trading account.  Stock covered calls are merely standardized call options that are secured by the shares of stock that are already owned in the sellers trading account.  Since each option contract represents 100 shares of stock, these covered option calls can only be sold (also known as writing a call option) based on full 100 share increments of the underlying stock that the option is being written against.  For example, if an investor holds 670 shares of Cisco Systems (CSCO) in their account, they would be able to write (or sell) 6 stock covered calls.</p>
<p>Now that we&#8217;ve gone over what stock covered calls are, lets look at how to use them.  Lets continue with the example of the investor with 670 shares of CSCO in their stock market investing account.  Since CSCO does not pay a dividend, and the investor wants income without having to sell his stock, he decides to sell call options that will expire in two months, for a price that is above todays stock price for CSCO.  In return for this option, the investor gets $1 per share, or $100 per <a href="http://www.online-investing-secrets.com/options/covered-option-calls/" target="_self">covered option calls</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/covered-option-calls/" target="_blank"><span>&nbsp;</span></a> contract, times 6 contracts equals $600.  This cash is deposited directly into the investors trading account, and can be used for whatever purpose the investor chooses.  The investor is now obligated to sell the contract holder 600 shares of stock at the price specified in the contract, on or before the expiration date of the contract. </p>
<p>Now if the stock price does not go above the contract strike price, the investor who sold the option contracts keeps his stock, and the cash he got from selling the stock covered calls, and can do it all over again on the trading day after the contract expires.  This is a very powerful concept, since it means that the investor can generate income multiple times per year by selling these call options. </p>
<p>If the stock closes above the price specified in the contract, usually around the date the contract expires, the contract will be exercised by the option holder, and the investor will have to sell him the 600 shares of CSCO at the price specified in the option contract.  Since the contract price is above the price that the stock was trading at when the options were sold, the investor gets that capital gain profit, plus the cash that he was paid for selling the options.</p>
<p>While stock covered calls may seem a little complicated at first, in the end they provide you with a relatively easy way to generate cash flow on stocks that would otherwise just be sitting in your investment account.</p>

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		<title>Covered Option Calls</title>
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		<pubDate>Wed, 10 Feb 2010 04:41:33 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
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		<guid isPermaLink="false">http://www.online-investing-secrets.com/?p=480</guid>
		<description><![CDATA[Covered option calls are a popular way to generate recurring investment income in an investment portfolio, even in retirement portfolios like Individual Retirement Accounts (IRA 0&#8217;s).  This income can be generated on any stock in your portfolio that has actively traded options associated with it, the caveat being that you need to own at least [...]


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			<content:encoded><![CDATA[<p>Covered option calls are a popular way to generate recurring investment income in an investment portfolio, even in retirement portfolios like Individual Retirement Accounts (<a href="http://en.wikipedia.org/wiki/Individual_Retirement_Account" target="_blank">IRA</a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://en.wikipedia.org/wiki/Individual_Retirement_Account" target="_blank"><span>0</span></a>&#8217;s).  This income can be generated on any stock in your portfolio that has actively traded options associated with it, the caveat being that you need to own at least 100 shares of the stock you are going to sell covered option calls against in order to take advantage of this money making strategy.</p>
<p>Let&#8217;s start by looking at what a <a href="http://www.online-investing-secrets.com/options/call-option/" target="_self">call option</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/call-option/" target="_blank"><span>&nbsp;</span></a> is.  A call option contract gives the buyer the right, but not the obligation, to buy 100 shares of stock at the price defined in the contract (strike price), on or before the date the contract expires (expiration date).  One of the key concepts here is that the buyer of the covered option call contract would lose money if they exercised their right to buy the stock, if the stock is trading below the strike price of the contract.  This is simply because they could buy the stock for a lower price on the open market, so there would be no point in exercising the call option contract under these circumstances.</p>
<p>In order to implement this income producing strategy, an investor will have to do a couple of simple tasks.  First, the investor would have to ask their broker to set up their trading account to allow options trading.  This usually involves reading a short pamphlet on the risks associated with standardized options trading, and signing a form indicating that you understand the risks.  The investor will probably also have to tell the broker what options trades they want to be approved for, and their risk tolerance for these types of trades.  As I indicated earlier, this strategy is so conservative, most stock brokers will even let you do it in your IRA account.</p>
<p>Next, the investor must identify which stocks they would like to sell options against.  These stocks can have options sold against them in 100 share multiples, since each contract represents 100 shares.  For example, if you own 230 shares of Apple (AAPL) in your account, you could write 2 covered option calls contracts against 200 shares of the Apple computer stock in your account.  Finally, the investor needs to determine what price they would be like to write the contract for, and how long they would like the contract to be in place.</p>
<p>Once the investor has completed these steps, they merely need to call their broker (or login to their online trading account), and place the order to sell the covered option calls from their account.  Once the sale is complete, the investor will receive cash in their account for the call options that they sold &#8211; this cash is theirs to keep.</p>
<p>If, at the end of the contract period, the price of the stock is below the call option strike price, then the investor keeps their stock, and can write new covered option calls against their shares of stock.  However, if the stock price has risen above the strike price of the option contract, then the investor will have to sell his shares to the contract holder at the strike price specified in the agreement.</p>

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		<title>Call Option</title>
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		<pubDate>Tue, 09 Feb 2010 03:17:41 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
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		<description><![CDATA[A call option is a useful tool for stock market investors to master.  First I will go over what a call option is, then descrcibe why it is a valuable tool for stock investors.  Just a note &#8211; I am going to describe standard options contracts that are traded in the United States.
Call option definition [...]


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<li><a href='http://www.online-investing-secrets.com/options/stock-covered-calls/' rel='bookmark' title='Permanent Link: Stock Covered Calls'>Stock Covered Calls</a> <small>Stock covered calls are a technique use by stock market...</small></li>
<li><a href='http://www.online-investing-secrets.com/options/leaps-covered-calls/' rel='bookmark' title='Permanent Link: LEAPS Covered Calls'>LEAPS Covered Calls</a> <small>LEAPS Covered Calls LEAPS covered calls are much like other...</small></li>
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			<content:encoded><![CDATA[<p>A call option is a useful tool for stock market investors to master.  First I will go over what a call option is, then descrcibe why it is a valuable tool for stock investors.  Just a note &#8211; I am going to describe standard options contracts that are traded in the United States.</p>
<p>Call option definition &#8211; an option contract that gives the current holder the right, but not the obligation, to buy 100 shares of stock in a specific company, at certain price (the options strike price), by a specific date (the expiration date).  Conversely, the seller of the <a href="http://en.wikipedia.org/wiki/Option_(finance)" target="_blank">option</a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://en.wikipedia.org/wiki/Option_(finance)" target="_blank"><span>0</span></a> contract is obligated to sell 100 shares of the specified company to the holder of the contract, for the strike price of the contract, if the contract holder exercises his right to buy the stock on or before the expiration date.  This explanation probably needs an explanation to make the principal clear.</p>
<p>Lets say an investor holds 100 shares of General Electric (GE) in his trading account.  The dividend was cut, so the investor decides to sell a <a href="http://www.online-investing-secrets.com/options/covered-call/" target="_self">covered call</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/covered-call/" target="_blank"><span>&nbsp;</span></a> option to generate some income, using his 100 shares of GE as collateral to &#8220;cover&#8221; the transaction.  The investor notes that the price of GE is currently $15, and the investor thinks it will probably stay under $20 over the next two months, so he sells a $20 call option, with an expiration date that is two months out, and he receives $1 per share ($100 total) in cash for the option contract.  At this point, the investor with the GE shares in his account is obligated to sell whoever is holding the call contract his 100 shares of GE stock for a price of $20 per share, until the contract expires.</p>
<p>So we&#8217;ve looked at why someone would sell <a href="http://www.online-investing-secrets.com/options/covered-option-calls/" target="_self">covered option calls</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/covered-option-calls/" target="_blank"><span>&nbsp;</span></a> contracts &#8211; because they want the income, and do not believe the stock price will go above the strike price of the contract, but why would someone buy the GE call option contract?  Because they believe the stock may experience an upward move in price, and by utilizing only $1oo, they actually control 100 shares of GE stock, and can profit on any move over the strike price.  For instance, if GE went up to $25, the contract holder could call away the stock from the contract seller for $20 per share, and immediately turn around and sell the stock for $25, locking in a nice 400% profit in a period of two months.</p>
<p>As you can see, a call option can generate income for the person who sells the contract, as well as occasionally being a lucrative investment for the person who buys the contract.</p>

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		<title>Covered Call</title>
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		<pubDate>Sun, 07 Feb 2010 20:54:41 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
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		<description><![CDATA[Covered Call
A popular strategy 0 amongst investors looking to generate extra income from their portfolios is to sell a covered call option on stock that they already own in their investment portfolio.  Selling covered calls can be a good way to generate regular income on stocks that do not even pay dividends (but you can [...]


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<li><a href='http://www.online-investing-secrets.com/options/call-option/' rel='bookmark' title='Permanent Link: Call Option'>Call Option</a> <small>A call option is a useful tool for stock market...</small></li>
<li><a href='http://www.online-investing-secrets.com/options/stock-covered-calls/' rel='bookmark' title='Permanent Link: Stock Covered Calls'>Stock Covered Calls</a> <small>Stock covered calls are a technique use by stock market...</small></li>
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			<content:encoded><![CDATA[<h3>Covered Call</h3>
<p>A popular <a href="http://en.wikipedia.org/wiki/Strategy" target="_blank">strategy</a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://en.wikipedia.org/wiki/Strategy" target="_blank"><span>0</span></a> amongst investors looking to generate extra income from their portfolios is to sell a <strong><span style="text-decoration: underline;">covered call</span></strong> option on stock that they already own in their investment portfolio.  Selling covered calls can be a good way to generate regular income on stocks that do not even pay dividends (but you can use this income producing strategy on dividend stocks too).</p>
<p>First, lets look at how this strategy works.  In this example, you own 100 shares of XYZ company in your investment account, it pays no dividend, and while you expect it to increase in price over time, it isn&#8217;t gaining in price very quickly, so you&#8217;d like to generate income with the stock until it hits your target sell price.  To do this, you sell a covered <a href="http://www.online-investing-secrets.com/options/call-option/" target="_self">call option</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/call-option/" target="_blank"><span>&nbsp;</span></a> contract against your 100 XYZ shares (your 100 shares &#8220;cover&#8221; the contract as collateral).  In this scenario, somebody pays you cash that goes into your investment account, and no matter what happens next, the cash is yours to keep.  The terms of the contract are very simple &#8211; you promise to sell your 100 shares of XYZ to the person who holds the contract at the price specified in the contract, by the date the contract expires &#8211; this last term is very important. </p>
<p>To continue our example, lets say XYZ company is currently selling for $20 per share, and you sell a call option using your 100 shares of XYZ stock as collateral with a strike price of $25, and a contract expiration date two months from now.  You receive $1 per share for your covered call contract, or $100 total, which is deposited into your investment account.  As long as the stock is less than $25 over the next two months, you will keep your stock, and the $100 you got for selling the contract.  In this case, you will be able to to do the same thing again after two months, up to six times per year.  In this example, you would be able to generate up to $600 in option income over the course of a year, from a stock that was just sitting in your online trading account.</p>
<p>What if the stock had risen above $25?  In this case, you would most likely have to sell your stock to the <a href="http://www.online-investing-secrets.com/options/covered-option-calls/" target="_self">covered option calls</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/covered-option-calls/" target="_blank"><span>&nbsp;</span></a> contract holder (this is done automatically by your online broker), for $25.  So in this case, you would get the $25 per share for your stock, plus the original $1 per share that you kept from the sale of your option contract, for a total of $26 per share (or $6 per share gain from your $20 starting price) &#8211; not a bad profit for two months of risk in the stock market.</p>
<p>In order to execute this strategy, you will need to sign up with your stock broker to trade <a href="http://www.cboe.com/" target="_blank">options</a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://www.cboe.com/" target="_blank"><span>0</span></a> in your account.  This strategy is so so conservative, that many brokers actually allow you to sell covered call contracts in your retirement IRA account.</p>

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		<title>Stock Options Basics</title>
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		<pubDate>Fri, 05 Feb 2010 04:44:32 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
				<category><![CDATA[Options]]></category>
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		<category><![CDATA[Call Option]]></category>
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		<description><![CDATA[Stock Options Basics
Stock options provide advanced investors with more ways to make money in the stock market, and in fact, they
At their most basic level, stock options are a contract between a buyer and a seller that gives the buyer the right to buy (with a call option &#160;) or sell (with a put option) [...]


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<li><a href='http://www.online-investing-secrets.com/options/covered-option-calls/' rel='bookmark' title='Permanent Link: Covered Option Calls'>Covered Option Calls</a> <small>Covered option calls are a popular way to generate recurring...</small></li>
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			<content:encoded><![CDATA[<h3>Stock Options Basics</h3>
<div><span style="font-size: small;">Stock options provide advanced investors with more ways to make money in the stock market, and in fact, they</span></div>
<div><span style="font-size: small;">At their most basic level, stock options are a contract between a buyer and a seller that gives the buyer the right to buy (with a <a href="http://www.online-investing-secrets.com/options/call-option/" target="_self">call option</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/call-option/" target="_blank"><span>&nbsp;</span></a>) or sell (with a put option) 100 shares of a particular stock to the seller of the option at a specific price, by a certain date. It is important to note that the option buyer is under no obligation to exercise their option, so the option buyer&#8217;s total risk is limited to the amount they paid for the option.</span></div>
<div><span style="font-size: small;">Call options give the option buyer the right to buy 100 shares of the underlying stock at the strike price in the option contract by the date specified in the options contract. The call option buyer is not obligated to exercise the contract, but if the buyer chooses to exercise the contract, the seller is obligated to sell 100 shares of stock at the strike price. From the option buyers perspective, a call option is a bet on the underlying stock gaining in share price. A call option becomes more valuable as the price of the underlying stock goes up.</span></div>
<p><span style="font-size: small;">Put options give an option buyer the right to sell 100 shares of an underlying stock at the strike price that the option contract was written for. While the put option buyer is not obligated to exercise the contract, if the buyer does exercise the contract, the option seller is obligated to pay the contract price for 100 shares of the underlying stock from the contract buyer, on or before the expiration date of the contract. Put option buyers are betting that the price of the underlying stock will move down. A put option becomes more valuable when the price of the underlying stock goes down.</p>
<p><span style="font-size: small; font-family: Arial;"><span style="font-size: small; font-family: Arial;">are </span></span><span style="font-size: small;">one of </span><span style="font-size: small; font-family: Arial;"><span style="font-size: small; font-family: Arial;">the most versatile trading </span></span><span style="font-size: small;">vehicles available</span><span style="font-size: small; font-family: Arial;"><span style="font-size: small; font-family: Arial;">. </span></span><span style="font-size: small;">Options on stocks are highly leveraged derivative investments, with a very well defined risk/reward profile. </span></p>
<div><span style="font-size: small;">Stock options are traded in regulated exchanges (or markets), and depending on their liquidity, their price moves up and down throughout the day due to such factors as supply and demand, movement in the price of the underlying stock, length of time until the contract expires. Contracts on standardized options typically expire on the third Friday of their expiration month. For example, if you bought a July call option contract, it would expire on the third Friday in July.</span></div>
<div><span style="font-size: small;">Stock options are a popular way to control risk in a stock portfolio. They are also widely used by individual investors to generate income through strategies like <a href="http://www.online-investing-secrets.com/options/covered-call/" target="_self">covered call</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/options/covered-call/" target="_blank"><span>&nbsp;</span></a> writing. While equity options may seem a little confusing at first, it is well worth the effort to learn about them.</span></div>
<div><span style="font-size: small;"> </span></div>
<p></span><span style="font-size: small;"> </p>
<p></span></p>

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		<title>Best Dividend Stocks</title>
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		<pubDate>Wed, 03 Feb 2010 04:08:56 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
				<category><![CDATA[Dividend Investing]]></category>
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		<guid isPermaLink="false">http://www.online-investing-secrets.com/?p=456</guid>
		<description><![CDATA[ Best Dividend Stocks
When it comes to finding the best dividend stocks, you&#8217;ll probably want to use an automated stock dividend screener as a tool to find good candidates to buy.  Screening is a way to scan the stock market for stocks that meet your particular criteria.  Dividend investing &#160; can be very profitable, and while [...]


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			<content:encoded><![CDATA[<h3> Best Dividend Stocks</h3>
<p>When it comes to finding the best dividend stocks, you&#8217;ll probably want to use an automated stock dividend screener as a tool to find good candidates to buy.  Screening is a way to scan the stock market for stocks that meet your particular criteria.  <a href="http://www.online-investing-secrets.com/stocks/dividend-investing/dividend-investing/" target="_self">Dividend investing</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/stocks/dividend-investing/dividend-investing/" target="_blank"><span>&nbsp;</span></a> can be very profitable, and while there are many stock screening programs out there (some you pay for, some are free &#8211; I&#8217;ll list a couple of free ones at the end of this article), it is important to understand the characteristics of good dividend stocks, so your screening tool can help you filter out unacceptable choices.</p>
<p>For an easy dividend stock screener to find the best dividend stocks, I would suggest focusing on the following qualities to help find strong dividend stock candidates:</p>
<p>Dividend Yield &#8211; The dividend yield can be calculated primarily in one of two ways &#8211; either by using the trailing 12 months dividends, or by using the expected dividends for the upcoming 12 months, and then dividing that number by the current price of the stock.  Ideally you want to buy dividend stocks that have a yield that is higher than the overall market.  Stock market yields as well as individual stocks yields will fluctuate over time, as stock prices move up and down, and the amount companies pay out in dividends changes, so it is good to check these factors right before you buy a stock, and not just rely on data you put together at some earlier point in time. At this time, I would suggest looking for stocks with dividend yields of at least 4% to 5%.</p>
<p>Profit &#8211; Also known as earnings, profit drives company growth, and more importantly for us, profit is what pays dividends in healthy <a href="http://www.online-investing-secrets.com/stocks/dividend-investing/stocks-that-pay-dividends-6-reasons-dividend-stocks-may-be-right-for-you/" target="_self">stocks that pay dividends</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/stocks/dividend-investing/stocks-that-pay-dividends-6-reasons-dividend-stocks-may-be-right-for-you/" target="_blank"><span>&nbsp;</span></a> (some company&#8217;s pay for dividends by taking on more debt, and distributing that cash to share holders &#8211; see the next paragraph for more on debt).  While there are many ways to measure profitability, one widely used indicator that can be found on most stock screens is return on equity (ROE).  For ROE, the higher the better.  The minimum ROE we want is in the 10% to 12% range.  Another great indicator for profitability that is available on many stock screeners is earnings per share (EPS) &#8211; again, the higher the better for this indicator too.</p>
<p>Debt &#8211; Many of the best dividend stocks are from companies that are large, mature, and have accumulated long term debt during the process of growing into their current state.  The problem with debt is that too much of it can represent a risk to future dividend payments if the company goes into a rough patch, and earnings drop to the point where they may need the money they normally pay out as dividends to service their debt payments.  One easy way to measure debt is to look at the debt to equity ratio.  For our purposes, we would like to see the company financed with more equity than debt, which means that our dividend stock screener would need to limit the debt to equity ratio to less than .5, and ideally, you should look for stocks with a ratio even lower than that.</p>
<p>Market Cap &#8211; Also known as the market capitalization of a company, is a good way to filter the size of the company you are looking for.  Market cap is just the total number of shares outstanding, multiplied by the current price of the stock.  Most analysts use this as the measure of a company&#8217;s size.  For our dividend investing purposes, we want strong stable companies, and bigger companies are generally safer than smaller ones, so for market cap, select stocks that are at least $2 Billion. </p>
<p>Valuation &#8211; This is how much the market is paying for a company&#8217;s earnings stream.  For this, we actually want a low valuation, because that usually means that a company&#8217;s stock price has been beaten down relative to it&#8217;s earnings.  The price to earnings ratio (P/E) is a widely available indicator that can help you assess valuation on a free dividend stock screener.</p>
<p>A couple of free dividend stock screeners that you can try to help you find the best dividend stocks are at <a href="http://moneycentral.msn.com/investor/finder/customstocksdl.asp" target="_blank">MSN.COM </a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://moneycentral.msn.com/investor/finder/customstocksdl.asp" target="_blank"><span>3</span></a>and <a href="http://finviz.com/screener.ashx" target="_blank">FINVIZ.COM</a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://finviz.com/screener.ashx" target="_blank"><span>3</span></a>.</p>

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		<title>Stocks That Pay Dividends – 6 Reasons Dividend Stocks May Be Right For You</title>
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		<pubDate>Tue, 02 Feb 2010 03:20:51 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
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		<description><![CDATA[Stocks That Pay Dividends
Stocks that pay dividends can be a good alternative for investors either seeking regular income from their investment portfolio, or more consistent returns from their stock investments.  An investment in stocks that produce consistent dividends can be an ongoing source of profits for your portfolio.  These are some of the characteristics that these [...]


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			<content:encoded><![CDATA[<h3>Stocks That Pay Dividends</h3>
<p>Stocks that pay dividends can be a good alternative for investors either seeking regular income from their investment portfolio, or more consistent returns from their stock investments.  An investment in stocks that produce consistent dividends can be an ongoing source of profits for your portfolio.  These are some of the characteristics that these income producing investments provide:</p>
<ol>
<li>Stocks that pay <a href="http://en.wikipedia.org/wiki/Dividend" target="_blank">dividends</a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://en.wikipedia.org/wiki/Dividend" target="_blank"><span>0</span></a> can represent a single company, or they can be many companies under the organizational structure of a holding company, trust, closed end mutual fund, ETF, etc.  It is important to note that a majority of companies do not qualify for <a href="http://www.online-investing-secrets.com/stocks/dividend-investing/dividend-investing/" target="_self">dividend investing</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/stocks/dividend-investing/dividend-investing/" target="_blank"><span>&nbsp;</span></a> for the simple reason that they do not pay dividends.</li>
<li>Companies that pay dividends do so because their management teams and boards of directors make a conscious, regular, and most importantly &#8211; discretionary &#8211; decision to pay their shareholders a dividend.  While most companies do this quarterly, there are many <a href="http://www.online-investing-secrets.com/stocks/dividend-investing/stocks-that-pay-monthly-dividends/">stocks that pay monthly dividends</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/stocks/dividend-investing/stocks-that-pay-monthly-dividends/" target="_blank"><span>&nbsp;</span></a>.</li>
<li>Dividend stocks typically have policies in place that promote the ongoing payment of dividends.  So while the decision to pay a dividend is at the discretion of the management team and board of directors, they typically have a goal of managing the company in a way that preserves, protects, and in many cases, grows the dividend income streams for their shareholders over time.</li>
<li>In many cases, stocks that pay dividends represent companies that are large, and more established (i.e. they have been around for a while).  These companies have created consistent, stable cash flows with very predictable earnings.  For example, utilities are a great type of <a href="http://en.wikipedia.org/wiki/Stock" target="_blank">stock</a> <a class="wpsulink wpsulink_on" href="http://www.stumbleupon.com/url/http://en.wikipedia.org/wiki/Stock" target="_blank"><span>0</span></a> that pays a dividend, they have a steady, predictable, source of income, expenses that are understood (and that can usually be passed along to their customers if expenses go up unexpectedly), which leads to a stable source of profits to pay dividends with.</li>
<li>Stocks in general are volatile, but stocks that pay dividends are usually lower in volatility than the overall stock market.  This is because investors are confident enough in the earnings of these companies, and the income they produce on a regular basis for their shareholders, that they reward this stability with lower price volatility, due to the justified view that these stocks are safer than average.</li>
<li>There are also tax advantages to owning dividend paying stocks.  Capital gains only trigger a taxable event when these stocks are sold, just like regular stocks.  The key tax advantage is that right now, the maximum federal income tax rate for dividends is only 15%.  This tax rate is lower than the tax rate you pay on bond interest, which is usually taxed at the same rate as your salary.  15% is typically much lower than your marginal tax rate for other sources of income.</li>
</ol>
<p>As you can see, stocks that pay dividends have characteristics that set them apart from the overall stock market.  These income producing stocks may have a place in your investment portfolio.</p>

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<p class='technorati-tags'>Technorati Tags: <a class='technorati-link' href='http://technorati.com/tag/Boards+Of+Directors' rel='tag' target='_blank'>Boards Of Directors</a>, <a class='technorati-link' href='http://technorati.com/tag/Companies+That+Pay+Dividends' rel='tag' target='_blank'>Companies That Pay Dividends</a>, <a class='technorati-link' href='http://technorati.com/tag/Consistent+Returns' rel='tag' target='_blank'>Consistent Returns</a>, <a class='technorati-link' href='http://technorati.com/tag/Discretionary+Decision' rel='tag' target='_blank'>Discretionary Decision</a>, <a class='technorati-link' href='http://technorati.com/tag/Dividend+Income' rel='tag' target='_blank'>Dividend Income</a>, <a class='technorati-link' href='http://technorati.com/tag/Dividend+Increase' rel='tag' target='_blank'>Dividend Increase</a>, <a class='technorati-link' href='http://technorati.com/tag/Dividend+Paying+Stocks' rel='tag' target='_blank'>Dividend Paying Stocks</a>, <a class='technorati-link' href='http://technorati.com/tag/Dividend+Stock' rel='tag' target='_blank'>Dividend Stock</a>, <a class='technorati-link' href='http://technorati.com/tag/Dividend+Stocks' rel='tag' target='_blank'>Dividend Stocks</a>, <a class='technorati-link' href='http://technorati.com/tag/Holding+Company' rel='tag' target='_blank'>Holding Company</a>, <a class='technorati-link' href='http://technorati.com/tag/Income+Producing+Investments' rel='tag' target='_blank'>Income Producing Investments</a>, <a class='technorati-link' href='http://technorati.com/tag/Income+Streams' rel='tag' target='_blank'>Income Streams</a>, <a class='technorati-link' href='http://technorati.com/tag/Investment+Portfolio' rel='tag' target='_blank'>Investment Portfolio</a>, <a class='technorati-link' href='http://technorati.com/tag/Investment+Stocks' rel='tag' target='_blank'>Investment Stocks</a>, <a class='technorati-link' href='http://technorati.com/tag/Investors' rel='tag' target='_blank'>Investors</a>, <a class='technorati-link' href='http://technorati.com/tag/Management+Teams' rel='tag' target='_blank'>Management Teams</a>, <a class='technorati-link' href='http://technorati.com/tag/Organizational+Structure' rel='tag' target='_blank'>Organizational Structure</a>, <a class='technorati-link' href='http://technorati.com/tag/Predictable+Source' rel='tag' target='_blank'>Predictable Source</a>, <a class='technorati-link' href='http://technorati.com/tag/Single+Company' rel='tag' target='_blank'>Single Company</a>, <a class='technorati-link' href='http://technorati.com/tag/Stable+Source' rel='tag' target='_blank'>Stable Source</a>, <a class='technorati-link' href='http://technorati.com/tag/Stock+Dividend' rel='tag' target='_blank'>Stock Dividend</a>, <a class='technorati-link' href='http://technorati.com/tag/Stock+Investments' rel='tag' target='_blank'>Stock Investments</a>, <a class='technorati-link' href='http://technorati.com/tag/Stocks+That+Pay+Dividends' rel='tag' target='_blank'>Stocks That Pay Dividends</a>, <a class='technorati-link' href='http://technorati.com/tag/Stocks+That+Pay+Monthly+Dividends' rel='tag' target='_blank'>Stocks That Pay Monthly Dividends</a>, <a class='technorati-link' href='http://technorati.com/tag/Utility+Stocks' rel='tag' target='_blank'>Utility Stocks</a>, <a class='technorati-link' href='http://technorati.com/tag/Volatility' rel='tag' target='_blank'>Volatility</a></p>

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		<title>ROIC Growth Formula</title>
		<link>http://www.online-investing-secrets.com/online-investing/roic-growth-formula/</link>
		<comments>http://www.online-investing-secrets.com/online-investing/roic-growth-formula/#comments</comments>
		<pubDate>Tue, 19 Jan 2010 06:02:49 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
				<category><![CDATA[Online Investing]]></category>
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		<description><![CDATA[ROIC Growth Formula
The ROIC growth formula relies on evaluating return on invested capital (also known as ROIC) as a way of looking at stocks that helps smart value investors find good stocks to buy.  First let&#8217;s look at what is return on invested capital &#160;, then we&#8217;ll examine why companies with comparatively large values of this [...]


Related posts:<ol><li><a href='http://www.online-investing-secrets.com/stocks/value-stocks-investing/roic-what-is-return-on-invested-capital/' rel='bookmark' title='Permanent Link: ROIC &#8211; What is Return on Invested Capital?'>ROIC &#8211; What is Return on Invested Capital?</a> <small>ROIC &#8211; What is Return On Invested Capital? What is...</small></li>
<li><a href='http://www.online-investing-secrets.com/stocks/value-stocks-investing/roic-how-to-calculate-roic-nopat-vs-net-income/' rel='bookmark' title='Permanent Link: ROIC &#8211; How to Calculate ROIC &#8211; NOPAT Vs. Net Income'>ROIC &#8211; How to Calculate ROIC &#8211; NOPAT Vs. Net Income</a> <small>How to Calculate Return on Invested Capital &nbsp; (ROIC) &#8211;...</small></li>
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</ol>]]></description>
			<content:encoded><![CDATA[<h3>ROIC Growth Formula</h3>
<p>The ROIC growth formula relies on evaluating return on invested capital (also known as ROIC) as a way of looking at stocks that helps smart value investors find good stocks to buy.  First let&#8217;s look at <a href="http://www.online-investing-secrets.com/stocks/value-stocks-investing/roic-what-is-return-on-invested-capital/" target="_self">what is return on invested capital</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/stocks/value-stocks-investing/roic-what-is-return-on-invested-capital/" target="_blank"><span>&nbsp;</span></a>, then we&#8217;ll examine why companies with comparatively large values of this key performance indicator tend to outperform their competition over time (and make good value investment candidates).</p>
<p>The first step in the ROIC growth formula is understanding <a href="http://www.online-investing-secrets.com/online-investing/roic-return-on-invested-capital-how-to-calculate-roic/" target="_self">how to calculate ROIC</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/online-investing/roic-return-on-invested-capital-how-to-calculate-roic/" target="_blank"><span>&nbsp;</span></a> for the companies that you are thinking about investing in, so here is the formula:</p>
<p>(Net Operating Profit After Taxes) / (Invested Capital)</p>
<p>Now there are a couple of things that must be noted about this formula.  First, net operating profit after tax (NOPAT)is not the same thing as net income.  Net income counts money that a company receives from all sources, whereas NOPAT is derived from the sales that a business makes from the ongoing operations of its main business.  Some of the revenue that is not included in NOPAT are things like interest income from cash and cash equivalents (short term securities like T-Bills), and rent from real estate that the company may own, but sub-leases to other businesses because it is not currently needed by the company.  These types of revenue, that are not from sales of the companies main products and services, add noise to what we are seeking &#8211; a clear view of the company&#8217;s operating efficiency &#8211; so we take them out of the equation.  The second thing that we have to consider is that invested capital is not just equity (like what is used in <a href="http://www.investopedia.com/terms/r/returnonequity.asp" target="_blank">return on equity</a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.investopedia.com/terms/r/returnonequity.asp" target="_blank"><span>&nbsp;</span></a> (ROE) calculations), but also includes long term debt that is used to grow and sustain the business.</p>
<p>The ROIC growth formula is fairly simple &#8211; calculate the return on invested capital for the companies in the industry group you are considering investing in, identify the company with the highest value of this indicator, then buy it when it gets to a good price.  By comparing the return on invested capital values of companies in the same industry, the one with the highest return is likely to either continue dominating the industry, or, if it is not already dominating its industry, should outperform the industry over time.  If you think about it, the company with the highest return on invested capital is yielding a higher percentage of profit for every dollar invested in the company - either by equity share holders or debt bond holders.  The competitive advantage that allows a company to earn these higher than industry average returns are usually due to a dominating position in the market place, which makes it possible for them to charge more for their product or service relative to their cost, which leaves other companies in the sector competing based on price discounting (and lower margins).  Over time, this sustained competitive advantage allows the company with higher returns on invested capital to grow faster than its competition, which drives its stock price higher.</p>

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		<title>ROIC – What is Return on Invested Capital?</title>
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		<pubDate>Tue, 19 Jan 2010 00:23:28 +0000</pubDate>
		<dc:creator>franzen</dc:creator>
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		<guid isPermaLink="false">http://www.online-investing-secrets.com/?p=441</guid>
		<description><![CDATA[ROIC &#8211; What is Return On Invested Capital?
What is return on invested capital?   
Most casual investors have probably never heard of the acronym ROIC.  Investors that do their homework before they buy a stock have probably run across ROIC, but don&#8217;t really understand what it is, or why it is important.  So, what is return on invested [...]


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			<content:encoded><![CDATA[<h3>ROIC &#8211; What is Return On Invested Capital?</h3>
<p><strong><span style="text-decoration: underline;">What is return on invested capital?</span></strong>   </p>
<p>Most casual investors have probably never heard of the acronym ROIC.  Investors that do their homework before they buy a stock have probably run across ROIC, but don&#8217;t really understand what it is, or why it is important.  So, what is return on invested capital?  At a high level, ROIC is a way to measure how efficiently it uses the cash it invests in it’s operations – whether that cash comes from loans or cash it generates from its ongoing operations.  Another way looking at ROIC is the amount of profit that a business generates for every dollar invested in it&#8217;s ongoing operations.</p>
<p>Before we get into too much detail, here is <a href="http://www.online-investing-secrets.com/online-investing/roic-return-on-invested-capital-how-to-calculate-roic/" target="_self">how to calculate ROIC </a> <a class="wpsulink wpsulink_off" href="http://www.stumbleupon.com/url/http://www.online-investing-secrets.com/online-investing/roic-return-on-invested-capital-how-to-calculate-roic/" target="_blank"><span>&nbsp;</span></a>(return on invested capital):</p>
<p style="text-align: center;">Net Operating Profit After Tax<br />
&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;&#8212;<br />
Invested Capital (Long Term Debt + Equity)</p>
<p>When trying to answer the question &#8220;what is return on invested capital?&#8221;, or &#8220;why is ROIC better than ROE?&#8221;, there are a couple of details that an investor must master.  First, unlike return on equity, return on invested capital looks at all funding sources that a company&#8217;s management team uses to fund the growth of the business.  This includes both equity investments from shareholders, as well as debt investments from bondholders and banks.  ROE only uses shareholder equity as the denominator in the equation, which leaves out long term interest bearing debt used to finance the growth of the company.</p>
<p>The other detail that an investor needs to get used to is not just looking at net profit, which is used in the ROE calculation that they are probably accustomed to seeing, but instead looking at net operating profit after taxes (NOPAT) instead.  The difference in these two numbers is that net profit includes income from all sources, whereas NOPAT looks at income from sales revenue.  Some of the income items that are not included with NOPAT are interest on investments (typically interest that accrues on cash and cash equivalents), revenue from sub-leased office space, etc.  In other words, NOPAT focuses on revenue generated only from the main focus of the business activities of the company you are looking at.</p>
<p>By focusing on after tax net operating profit, and ALL of the capital that a business is using to sustain and grow that cash flow, the time it takes to learn what is return on invested capital can give an investor a much better and deeper view on the health of a company that is being considered as an investment candidate.</p>

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