|July 31, 2015
This Stock Yields 4.7% --
Now Let's Triple It
By Michael Vodicka
Dividend lovers rejoice, today's essay is dedicated to one of the best dividend payers in the S&P 500: Verizon Communications (NYSE: VZ).
Its current yield of 4.7% ranks as one of the 30 best dividends in the index and more than a 100% premium to the leading benchmark's average yield of 2%.
I also consider Verizon to be one of the safest dividends in the S&P 500. Verizon's business is not particularly sensitive to economic cycles. Even if the economy falls into a recession, very few people will cancel or change their mobile service. That's why Verizon was one of just a few S&P 500 companies able to grow its dividend through the financial crisis in 2008 and 2009.
But as robust and reliable as Verizon's dividend is, there's a chance to do even better. Today, I'm going to show you how my readers and I plan to triple its 4.7% yield, or at the very least buy the company at a significant discount.
Verizon is the No. 1 mobile carrier in the United States, with 103 million connections. In addition to its core wireless business, which accounts for more than 70% of revenue, Verizon also has more than 20 million fixed-line customers and more than 9 million broadband subscribers.
When you add it all together, Verizon's massive network is pumping out an incredible amount of data to a loyal subscriber base of more than 130 million -- equal to more than 40% of the population of the United States.
With Americans consuming a record amount of data at home and on mobile devices, Verizon has delivered record revenue in the last 12 months.
That makes this a good time to execute the Income Multiplier strategy, which is exactly what I recently recommended to readers.
If shares continue moving higher, we'll make an annualized return of 17.2%. If they fall, we'll have an opportunity to buy at a 9% discount to current prices.
To do this, you must sell put options. Now, while this may sound scary, or even risky, let me dispel that myth. Options are simple (once you understand how they work) and are a great alternate source of income. That's why my staff and I recently put together a Call Options 101 and Put Options 101 guide for new subscribers to my service.
Selling the particular Verizon puts I recommended creates two benefits. The first is that it will generate at least $40 for every put sold. That goes straight to your brokerage account -- instant income that beats waiting around for a dividend check, if you ask me.
The second potential benefit is that if Verizon falls 9% in the next 100 days, then we'll avoid the losses we would have incurred by simply buying shares outright, gain an opportunity to buy shares after they've already fallen, and collect a premium that reduces our cost basis.
And the best part is, you can repeat this strategy over and over to generate income on stocks you truly believe in. Verizon is a great example of this.
The trade I suggested my Income Multiplier readers to follow in early July is actually my third time predicting Verizon's share price will move higher. Last fall we captured a 5.4% return on capital in just 34 days -- an annualized gain of 58.3% -- and earlier this year we captured a 2.2% return in 84 days -- an annualized gain of 9.7%, more than double the amount you'd collect from dividends alone.
Income investors could easily just buy Verizon and collect its dividend payment, but this strategy allows you to generate more money in a shorter amount of time. My previous results speak for themselves.
Unfortunately, it is too late for readers to get in on my most recent Verizon trade. But I recommend similar income-generating opportunities like this each week, and I've led readers to annualized gains of 9.7% in 84 days, 33% in 77 days and 44% in 63 days, just to name a few.
If you'd like to learn more about the Income Multiplier strategy and how it can start generating more income for you today, simply visit this link.
Chief Investment Strategist