25% Annualized Yield On A Dividend Aristocrat's Next Payout

Looking to replace some missing income from slashed dividends? You may want to consider selling options. Trading strategies such as writing covered calls and selling cash secured puts began to gain more traction in the 2008-2009 market meltdown, when previously dependable dividend-paying stocks began cutting their dividends. Flash forward 12 years to the 2020 COVID-19 crash, and we're seeing that scenario play out again.

If you want to play it conservatively, maybe consider selling options on large cap, well known stocks, such as one of the Dividend Aristocrats, for example. Consolidated Edison, Inc. (ED) was founded in 1884, and is a member of the Dividend Aristocrats, having raised its dividend for 46 consecutive years. It has three areas of operation - Utilities, Transmission, and Clean Energy. Con Ed yields 4.26% and will go ex dividend ~8/13/20 for $.756. An August out of the money covered call option trade yields 2.5% in five weeks, or over 25% annualized.

Source: Seeking Alpha

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