Everyone would love to have millions in the bank later in life when they have the time to enjoy it …
The decade ahead offers a perfect opportunity to set up a Power Income portfolio that will blast off once America cleanses itself of massive debts and resets to a new beginning …
Here easy steps to generational wealth:
- Start building a portfolio of high-quality stocks that return anywhere from 7-12% in yield, with dividends reinvested automatically so your shares grow every quarter …
- Manage a systematic, disciplined option strategy that will triple your yield to over 20% and reduce your volatility…
- Invest a monthly amount so that you’re constantly adding shares to average your cost basis and ensure you’re invested at undervalued prices, primed to capture oversized returns in the next bull market …
A great way to add income to your portfolio … Covered Calls
Selling covered calls means you get paid extra money as you hold a stock in exchange for being obligated to sell it at a higher price …
That will cap your upside, BUT will generate high income in the meantime — even in a flat or bearish market.
The best time to sell a covered call is when you can calculate at what price your shares would be overvalued …
That brings to mind a recent purchase I made in Con Edison (Ticker: ED).
The first step in the process for selecting a stock in the Power Income Portfolio is to run it through the Power Income Valuation Model (PiVM), which I did with ConEd …
The stock is 15% undervalued and it just came off earnings, which were as expected, and the stock has been trading weak.
So it was time to pull the trigger…
A Current Power Income Trade
On Tuesday, I bought 100 shares of ConEd (Ticker: ED) at $67.37
I sold 1 68 strike expiring in 10 days at a premium of $.84
For my purchase at $67.37, I only paid the required margin, which was $2,040 and borrowed the rest at 9.5%…
Let’s review the two scenarios that can occur:
- ED settles above the 68 strike:
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- I would be obligated to sell my ED 100 shares at 68
- I would collect my $.84 premium
- My return on capital of $2,040 would be 6.6% over the 10-day period and 237% annualized
- That includes the charge for borrowing the balance
- ED stock settles below the 68 strike
-
- I would collect my $.84 premium, which pays me 3.52% over the 10-day period and 126% annualized…
20% Return on An S&P-rated Stock
ConEd pays $3.10 a share dividend that yields 4.58%, plus that dividend grows at 3.25%, so total return is 7.83% …
Then to be conservative, let’s say you sell a call each month at $.75 so that is $9, which is almost 3x the dividend payout …
All together, the dividend, capital appreciation on the stock and the option premium amount to a 20% return for an S&P rated stock!
Bring It Home
There are many stocks to choose from that can be a great addition to a Power Income Portfolio …
I am always available to share ideas and thoughts on how you can build and manage that portfolio on your own …
With a solid, disciplined approach, you will only need to put aside a few hours a week and you will be on your way to generational wealth.
Get started today!
And always …
Live and Trade with Passion My Friends,
Griff
