Dividends4Life: Stocks That Pay You Back

Stocks That Pay You Back

Posted by D4L | Saturday, July 17, 2010 | | 0 comments »

Investors have gotten increasingly frustrated with companies that hoard their cash instead of putting it to better use -- like paying dividends to shareholders. But if you like a particular stock as an investment, but also need to draw income from it, there's still a way to turn you shares into a stream of income.

Dividend-paying stocks offer a great way to generate income from your investment portfolio. But if you want to own stocks that don't pay dividends, you can still reap some income from your investment. By using a strategy involving options, you can create regular income from your share holdings. The strategy is known as a covered call position. For every 100 shares of a certain stock you own, you can write one call option, which entitles whomever buys that option from you to purchase your shares at a certain price, within a particular timeframe. In exchange for that right, you get paid what's known as a premium in cold, hard cash. The premium is yours to keep, no matter what happens.

Source: Motley Fool

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