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Doubling Down On Dogs Of The Dow Dividends For 10%-Plus Yields

Published Sat, 13 Apr 2019 09:15:00 -0400 on Seeking Alpha

The Dogs of the Dow have the highest dividend yields in the Dow, but they're still below 5%. However, we've found some high yield options-selling trades that work in tandem with upcoming quarterly dividends, greatly enhancing their yields.
The three stocks we'll focus on are Chevron (CVX), Exxon Mobil (XOM) and Coca-Cola (KO), all of which are in the top five dividend yields of the Dow 30 index:
Although their yields are among the highest in the Dow, the year-to-date price gains for two of these stocks, CVX and XOM, are anything but doggy - XOM is up over 20%, and is up 15.8% so far in 2018. KO has lagged, though, and is down -1.37%:

Dividends:
All three of these dividend stocks are in the Dividend Aristocrats group, having raised their dividends for at least 25 consecutive years.
XOM and KO have the best five-year dividend growth in this trio, averaging 5.63% and 5.05% respectively, vs. 2.85% for CVX.
The yields range from ~3.43% for KO, to 3.98% for CVX, to 4.04$ for XOM. We used 2018 EPS for all three to determine their trailing dividend payout ratios. CVX has the most conservative payout ratio, at 57.40%, followed by XOM, at 66.20%, and KO, with 101.90%.
KO also reports an earnings metric called "Comparable EPS," which were $2.08 in 2018, vs. EPS of $1.57. (More on this in the Valuations section further on.)
CVX and XOM go ex-dividend next in May, while KO goes ex- in mid-June.
Creating Higher Yields With Options Selling:
XOM... Read more

Stock name Last trade   P/E Earnings/Share Dividend/Share Dividend yield
EXXON MOBIL 81.76   16.8 4.88 3.28 3.96
CHEVRON 118.28   15.3 7.74 4.76 3.90
COCA-COLA 47.98   30.6 1.57 1.60 3.38

EXXON MOBIL - XOM
EXXON MOBIL - XOM  


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