Thread: CLX

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  1. #1
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    CLX

    I've been wanting to buy Chlorox for awhile but never really was able to get it at a decent valuation. It is still overvalued a bit but this stock may trade at a premium. Thinking of selling 2 cash secured put at 145 expiring November 15, 2019. Right now the yield is about 2.8%. Anyone else looking at this stock?

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    #2
    Why would you own a stock that has a yield that is so close to a CD yield?

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    #3
    Quote Originally Posted by Bassin08 View Post
    Why would you own a stock that has a yield that is so close to a CD yield?
    With the expectation that the dividend grows over time. If we are in a low rate environment for the long term then when the CD matures you may have to reinvest at a lower yield. Of course nothing is certain when it comes to dividends but certain companies do have commitments to grow it.

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    #4
    Do you think that when a company’s stock is going down they sometimes increase their dividend to keep investors interest?

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    #5
    Quote Originally Posted by Bassin08 View Post
    Do you think that when a company’s stock is going down they sometimes increase their dividend to keep investors interest?
    Not really because if it gets too high and the payout ratio starts looking unsustainable then it starts looking like a giant red flag for a dividend cut. Now if the payout ratio and dividend coverage are there when a stock falls then it may set a floor if the yield increases. If it works right and you get a company that consistently raises its dividend in excess of inflation you get a cost of living adjustment. Nothing is guaranteed though.

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    #6
    I am thinking about Altria (MO). They just raised their dividend to 7 % I believe? The stock has dropped 45% in the past two years.

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    #7
    Broadcom is one I bought about a year ago. They have been raising their dividend like crazy. 110% in 2017 and 77% in 2018. It is a volatile stock though but if that thing drops back to the 215-220 range I'm going to buy more. Their credit rating isn't real great BBB- so definitely not a sleep well at night stock.